International Economics

The payoff matrix supplied shows outcomes of various strategies that two firms might follow in response to action on the part of the other company. This payoff matrix describes actions in developing vaccines for not-too-rare but also not-too- common diseases. Each element shows the payoffs to a set of strategies as the payoff to the domestic firm, then a comma, then the payoff to the foreign firm. Foreign firm Enter Not Enter Enter -53,-53 128,0 Domestic firm Not Enter 0,128 0,0 What is the minimum subsidy the US must offer the domestic firm to ensure that it will choose to produce the vaccine