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Two firms are situated next to a lake, and it costs each firm use filters that avoid polluting the lake. However, each firm must use

Two firms are situated next to a lake, and it costs each firm use filters that avoid polluting the lake. However, each firm must use the lake?s water in production, so it is also costly to have a polluted lake. The following is the payoff matrix that represents the payoffs associated with each firms' decisions based upon the other firm's decision.

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