Problem
Two firms are competing against each other in an oligopoly. Both are deciding whether to build a big factory or a small factory. Firm A will decide first and Firm B will decide second. If they both build a big factory, Firm A receives $5, and Firm B receives $10. If Firm A builds a big factory and Firm B builds a small factory, Firm A receives $3, and firm B receives $7. If Firm A builds a small factory and Firm B builds a large factory, Firm A receives $4, and Firm B receives $9. If they both build a small factory, Firm A receives $6 and Firm B receives $8.
What will be the payouts for Firm A and Firm B respectively?