Consider trade relationsbetween Canada and Mexico. Assume that the leaders of the two countries believe the payoffs to alternative trade policies are as follows:

Canada's Decision

		Low Tariffs	High Tariffs
Mexico's Decision	Low Tariffs	Canada gains $25 billion Mexico Gains $25 billion	Canada gains $30 billion Mexico Gains $10 billion
	High Tariffs	Canada gains $10 billion Mexico Gains $30 billion	Canada gains $20 billion Mexico Gains $20 billion

a. Is there a dominant strategy for Canada? If existing, state its dominant strategy and explain why. If not existing, explain why its dominant strategy is not existing.

b. Is there a dominant strategy for Mexico? If existing, state its dominant strategy and explain why. If not existing, explain why its dominant strategy is not existing.

c. What is the Nash equilibrium for this trade policy? And what are the payoffs in Nash equilibrium for Canada and Mexico respectively? d. In 1993, Parliament ratified the North American Free Trade Agreement (NAFTA), in which Canada, the United States, and Mexico agreed to reduce trade barriers simultaneously. Do the perceived payoffs shown here justify this approach to trade policy? Make sure to explain this using the Prisoners' Dilemma.