Determine the equilibrium of the game

Reference no: EM131124967

The neighboring towns of Arlington and Belmont are trying to decide in which locality to site a new waste incinerator. The towns will share the benefits of the facility and also share the costs. Each estimates its net benefit from the incinerator to be $10 million. However, each reckons a
$6 million economic cost (due to lower neighborhood property values, environmental and safety concerns) from having the incinerator located in its town.

a. Construct the payoff table listing the towns' possible actions and overall net benefits.

b. Determine the (Nash) equilibrium (or equilibria) of the game. Explain.

c. What arrangement might induce one of the towns to willingly accept the facility?

Reference no: EM131124967

Questions Cloud

Shares of common stock outstanding : Price Corporation has 100 shares of common stock outstanding. Price repurchased all of Penny's 30 shares for $35,000 cash during the current year. Three years ago, Penny received the shares as a gift from her mother.

What is the concentration of glucose in blood : John has a fasting blood glucose level of 184 mg/dL. What is the concentration of glucose in his blood. (glucose MW = 180g/mol, mg/dL = mg/100 mL)

Internship with the successful management consulting : You just started a summer internship with the successful management consulting firm of Kirk, Spock, and McCoy. Your first day on the job was a busy one, as the following problems were presented to you.

What is the new profit maximizing output : What is the new profit maximizing output?

Determine the equilibrium of the game : What arrangement might induce one of the towns to willingly accept the facility?

Makes very elaborate wedding cakes to order : Clare's Super Cake Company makes very elaborate wed- ding cakes to order. The company's owner, Clare Cole, has provided the following data concerning the activity rates in its activity-based costing system:

What ethical philosophy the senior and junior senators : A first-term junior senator has placed a bill before the Senate that promises to correct tax inequities that affect thousands of workers. However, the bill is being held up in committee. Identify and tell what ethical philosophy the senior and junior..

Relationship that exists between purine and pyrimidine : the numeric relationship that exists between purine and pyrimidine bases in DNA molecules- show whether the same is valid for RNA molecules

How a misstep by heinz laid the path for french quest : Respond to the following discussion starter - In late 2013, the H.J. Heinz Company was sold to its new owners Berkshire Hathaway and 3G capital of Brazil, who then engaged in a massive cost-cutting programme. How a misstep by Heinz laid the path f..

User Account

All Pages