Question 1 In this question, we will consider a version of the asset ownership model where the (S)upp1ier makes a cost-saving investment that does not directly increase the nal value V. As usual, there is a (S)e11er and a (B)uyer. B needs a widget for production. prroduction is suc- cessful, then total value is us + vs = V. The widget requires an asset to produce; B but not S can use the asset to make the widget noncooperatively, so of; = V and v; = 0. Further, assume that v? = of} = 0; the party without the asset cannot create any value noncooperatively. S chooses investment e at cost 31382. B chooses investment B at cost %(E2 Be). That is, a larger investment by S reduces the cost of investment for B. Suppose V = B; so only B's investment directly aects the value of the transaction. The game proceeds as usual: . Ownership of the machine is allocated. . S chooses e. . B chooses E. . B and S bargain. . B and S receive their payo's. We'll work this out step-by-step: