Suppose that in order to engage in business firms need permission from a two-level hierarchy of government officials, A and B. However, to receive the permit, they have to bribe the officials. Suppose that the number of firms N who engage in said business is a declining function of the total bribe needed to obtain a permit. That is,
N = 600 - 5(x+y) where x and y are the bribes demanded by A and B respectively.
Question: Find the Nash equilibrium bribes demanded by A and B.
**I have attempted this problem and know that I need to find the Best Response function to find the NE. So, I rearranged for x and y and took the derivative with respect to N but get -1/5 for each which does not make sense to me. I hope you can help me with this question. Thank you so much :)
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