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two firms ( form A and firm C ) compete for customers and are considering improving their operations. Each firm has one of two options:
two firms form A and firm C compete for customers and are considering improving their operations. Each firm has one of two options: i to invest in a new AIpowered recommendation system or ii to invest in upgrading their Data Management Systems. Investing in the recommendation system carries a cost of for each firm and generates a benefit of v or equal to bgut as this system is patentable only one firm could reap this reward: if both firms invest in the recommendation system then each gets on expectation v while if only one invests it receives v Upgrading data Management Systems generates an individual benefit of but also an individual cost that is increasing in the number of firms upgrading: if only one firm upgrades it bears a cost of while if both firms upgrade tehy each incur a cost of Both firms simultaneously decide whether to invest in the recommendation system or upgrade Data Management
write is firm Rs best response as a function of the parameter v to firm C upgrading its data management system? What is F down he x payoff matrix of this game. What is firm Rs best response as a function of the parameter v to firm C investing in the recommendation system?
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