Answer to Question #145541 in Economics of Enterprise for 123123

Question

Through collaboration betwen companies A and B,economical value is created. The equation for the value generation is P= √zA + √zB. √zA and √zb are the respective companie's investment. After the companies' investment levels are decided, A and B divide p (value generated) equally. (a)Determine the Nash equilibrium investment levels, and the consequent payoffs for each firm. (b)Suppose that A and B merge instead. What is the the optimal investment levels and the payoff for the new merged firm. Do the firms benefit at all from the merger?

Answer 1

Dear 123123, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order