Glassworks and Clearsmooth compete in the local market for windshield repairs. The market size (total available profits) is $10 million per year. Both firms choose simultaneously whether to advertise on local television. If a firm chooses to advertise in a given year, it costs that firm $3 million. If one firm advertises and the other doesn't, then the former captures the whole market. If both firms advertise, they split the market 50:50. If both firms choose not to advertise, they also split the market 50:50.

1. Suppose the firms play this game repeatedly forever. They both adopt a tit-for-tat (TFT) strategy. Find the range of values of time discount factor for which the TFT strategy is able to sustain cooperation in the game. (10 points)
2. Suppose the firms play this game repeatedly forever, but they both know that there is a 20% probability in any given year that the market for windshield repairs disappears due to technological innovation. If the market disappears, the repeated game between the two firms ends. In this new game, find the range of values of time discount factor