Gillette and Schick are two of the dominant manufactures of disposable razors worldwide. Each

firm can either sign or not sign an exclusive contract with Hugh Jackman to appear on their TV

ads. If both companies manage to sign with Jackman, they will each make $7 million in economic

profit.If only one of them signs, it earns $10 million in economic profit and the other firm incurs

an economic loss of $1.5 million.If neither firm signs, they only make normal profit.

Build the pay-off matrix for the above game. Identify "Nash Equilibrium", if any. Is this

equilibrium optimal for both companies? Justify your answer.