Please refer to the following question:

Two automobile manufacturers, Ford and GM, plan to offer 10-year warranties to their new models. Although the warranties are expensive to offer, it could be disastrous for one firm if it does not offer a warranty while its competitor does. The normal form of this warranty game is expressed below. If the game is repeated infinitely and both firms use a trigger strategy, at what level of the discount factor, & (= 1/(1 + r)), will each firm choose to cooperate ("no warranty")? Explain the implication of this result using the concept of the discount rate r. GM Warranty No warranty Warranty 40, 40 150, 10 Ford No warranty 10, 150 70, 70