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Suppose there are two firms in the market for computer processors Intel is considering developing a new technology that would reduce the costs of production The development of this technology would

Suppose there are two firms in the market for computer processors. Intel is considering developing a new technology that would reduce the costs of production. The development of this technology would cost Intel a fixed cost of C. If Intel develops the technology AMD can adopt it for a smaller cost of C/2. If Intel innovates and AMD does not then Intel will earn $20 in revenue and AMD will earn $0. If they both adopt the technology they will each earn $15 in revenue. If neither firm uses the new technology they each earn $5 in revenue.

Apr 30 2020 View more View Less

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