The above figure shows the payoff matrix (in $) for two players. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach.

a) Please determine the Nash equilibrium without property rights and the total welfare.

Let say the firm is releasing 1 ton of pollution ate first

b) If the chemical firm owns the lake and the beach owner must pay the chemical firm $10

25 15 10 20 The above gure shows the payoff matrix (in $) for two players. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. a) Please determine the Nash equilibrium without property rights and the total welfare. Let say the rm is releasing 1 ton of pollution ate rst b) If the chemical rm owns the lake and the beach owner must pay the chemical rm $10 to produce only one ton of pollution, what is the outcome? Please also calculate the joint prots. c) If the beach owner owns the lake and the chemical rm must pay the beach owner $10 per ton of pollution, what is the outcome? Please also calculate the joint prots in this case