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Explain net rent results in terms of bargaining potential

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Two (2) slum landlords own rows of houses on opposite sides of the street. Each would gain if the other upgraded his own property. Neither slum landlord wants to upgrade until the other does. 

(a) Explain the "net rent" results in terms of the bargaining potential and the existence of a Nash equilibrium, where R = renovate and NR = no renovation by the landlords.

(b) Will the slum landlords upgrade? Why or why not?

Reference no: EM132404724

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