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Two firms on a river. Each period it costs $1500 to each firm to use filters to avoid pollution of this river. Each firm also
Two firms on a river. Each period it costs $1500 to each firm to use filters to avoid pollution of this river. Each firm also uses river water for production, so a polluted river is costly. It costs each firm 1000x the number of polluting firms to deal with the polluted river for each firm. One periods outcomes are in the matrix below. The first number of each pair of payoffs is L's payoff, and the second is N's payoff. Assume the firms cooperate with each other for best outcomes.
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