China and the United States: Two choices: Raise tariff by 25% or leave tariffs alone. If both countries raise tariffs, each country’s GDP decreases by $200 billion. If neither country raises tariffs, each country’s GDP remains the same. If only one country raise its tariff, its GDP increases by $600 million and the other country’s GDP decreases by $400 billion. Draw the payoff matrix and find the Nash equilibrium.
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