Firm U is the unique producer and supplier of cement in the island of Sardinia, Italy....

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Firm U is the unique producer and supplier of cement in the island of Sardinia, Italy. Cement is heavy; therefore, it has a very high transportation cost to import from mainland Italy. The international market price of cement is 100 euros per ton. It costs 20 euros/ton to import it from mainland Italy or elsewhere. U has a cost of production equal to 70 euros/ton. This is private information, not known to the clients of U. U has currently no stock of cement to deliver. U has only two clients. Firms D1 and D2 are major construction companies in Sardinia. Firm D1 is owned by a Sardinian family which has a long-term business relation with U. Firm 2 is a syndicate representing very small construction companies. D1 and D2, although they belong to same industry, they are not direct competitors. D1 usually participates in public procurements for large multi-million private or public projects for office space, while D2 is part of the retail business, apartment renovations and small- scale constructions. In 2023, D1 intends to buy 50000 tons of cement while D2 24000 tons. D1 requires delivery in May 2023 whereas D2 about 2000 tons per month. If cement is not delivered on time, D1 and D2 incur huge foregone profits and result to loses and downsizing. D1 is more capital intensive and employs 60 employees, whereas the syndicate has about 3000 members, a number that corresponds to an equal number of families. The capacity of U is 8000 tons per month. Cement can be stored for 2 years without quality deterioration. Today is December 1, 2022 and negotiations are scheduled to take place. U asks for a price of 110 euros per ton and is willing to accept 90 euros per ton. D1 asks 80 euros per ton but is willing to pay up to 90 euros per ton. D2 asks for 90 euros per ton and is willing to pay 100 euros per ton. The willingness to pay and the willingness to accept are private information to each party. In case of a breakdown, buyers will be obliged to buy from the international market This will have negative repercussion in the whole apartment building industry and will increase unemployment considerably. Firm U is the unique producer and supplier of cement in the island of Sardinia, Italy. Cement is heavy; therefore, it has a very high transportation cost to import from mainland Italy. The international market price of cement is 100 euros per ton. It costs 20 euros/ton to import it from mainland Italy or elsewhere. U has a cost of production equal to 70 euros/ton. This is private information, not known to the clients of U. U has currently no stock of cement to deliver. U has only two clients. Firms D1 and D2 are major construction companies in Sardinia. Firm D1 is owned by a Sardinian family which has a long-term business relation with U. Firm 2 is a syndicate representing very small construction companies. D1 and D2, although they belong to same industry, they are not direct competitors. D1 usually participates in public procurements for large multi-million private or public projects for office space, while D2 is part of the retail business, apartment renovations and small- scale constructions. In 2023, D1 intends to buy 50000 tons of cement while D2 24000 tons. D1 requires delivery in May 2023 whereas D2 about 2000 tons per month. If cement is not delivered on time, D1 and D2 incur huge foregone profits and result to loses and downsizing. D1 is more capital intensive and employs 60 employees, whereas the syndicate has about 3000 members, a number that corresponds to an equal number of families. The capacity of U is 8000 tons per month. Cement can be stored for 2 years without quality deterioration. Today is December 1, 2022 and negotiations are scheduled to take place. U asks for a price of 110 euros per ton and is willing to accept 90 euros per ton. D1 asks 80 euros per ton but is willing to pay up to 90 euros per ton. D2 asks for 90 euros per ton and is willing to pay 100 euros per ton. The willingness to pay and the willingness to accept are private information to each party. In case of a breakdown, buyers will be obliged to buy from the international market This will have negative repercussion in the whole apartment building industry and will increase unemployment considerably.