Pfizer has a patent on a drug that treats heartburn. If the patent is about to expire, then Pfizer has two options: It can continue to charge a high price for its product, or it can charge a low price. After the patent expires, a drug company that produces generic drugs must decide whether to enter or not enter the market. The profits for each scenario are given in the accompanying payoff table.
Pfizer charges high price:
Pfizer receives \$15 billion profit; Generic receives \$10 billion profit.
Pfizer receives \$50 billion profit; Generic receives \$0 profit.
Pfizer charges low price:
Pfizer receives \$10 billion profit; Generic receives -\$2 billion profit.
Pfizer receives \$25 billion profit; Generic receives \$0 profit.
a. The Nash equilibrium when Pfizer and the generic manufacturer are making these decisions simultaneously is that Pfizer \_\_\_\_\_\_\_\_\_\_\_ and the generic manufacturer \_\_\_\_\_\_\_\_\_\_\_\_.