USA/Fiji No-Tax Tax No-Tax (10000,-99989) (10100,-89990) (9900,-9989) (10000,10) Tax We now want to understand whether the outcome above was driven by the fact that the government had to make these decisions simultaneously. Suppose instead that the US can move first and set an example to the rest of the world by choosing whether to impose a tax on polluting technology or not Fiji then observes this decision and chooses whether to impose a tax on its polluting technology. Th game therefore becomes a dynamic game, but the payoffs and actions remain as described in the previous sections. Actions: (a) Only the US imposes a tax: Tu = 2, tf = 0. (b) Only Fiji imposes a tax: TF = 2, TU = 0. (c) Both countries impose a tax: TU= TF = 2. (d) Neither country imposes a tax: TU TF= 0. 1. Represent this dynamic game using a game tree.
USA/Fiji No-Tax Tax No-Tax (10000,-99989) (10100,-89990) (9900,-9989) (10000,10) Tax We now want to understand whether the outcome above was driven by the fact that the government had to make these decisions simultaneously. Suppose instead that the US can move first and set an example to the rest of the world by choosing whether to impose a tax on polluting technology or not Fiji then observes this decision and chooses whether to impose a tax on its polluting technology. Th game therefore becomes a dynamic game, but the payoffs and actions remain as described in the previous sections. Actions: (a) Only the US imposes a tax: Tu = 2, tf = 0. (b) Only Fiji imposes a tax: TF = 2, TU = 0. (c) Both countries impose a tax: TU= TF = 2. (d) Neither country imposes a tax: TU TF= 0. 1. Represent this dynamic game using a game tree.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 11E: Federal excise taxes on gasoline vary widely across the developed world. The United States has the...
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