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Let there be two companies X and Y. Each company has to, simultaneously and independently, decide whether to abate pollution or not. Each unit of
Let there be two companies X and Y. Each company has to, simultaneously and independently, decide whether to abate pollution or not. Each unit of pollution abatement costs 7 to the company that abates, but confers benefits of 5 per unit to both companies. If both companies abate, both experience a benet of 10 per unit. (a) Formulate this situation as a normal form game. (b) What is the outcome of this game? (c) Do any of the companies abate pollution? Explain why/ why not
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