Suppose Two Firms, Allstom from France, and Bombardier from Canada

Suppose two firms, Allstom from France, and Bombardier from Canada, are bidding on a contract to replace train cars for the subway system in Mexico City. If they bid the same amount, they share the contract-otherwise, the low bid wins. The figure below shows the payoff matrix for this contest. $\begin{array}{|l|l|l|}\hline \text { Bombardier (B) }&\text { Allstom (A) }\\\hline &\begin{array}{l}\text { A bids } \\\text { \$50 million }\end{array} & \begin{array}{l}\text { A bids } \\\$ 35 \text { million }\end{array} \\\hline \begin{array}{l}\text { B bids } \\\$ 50 \text { million }\end{array} & \begin{array}{l}\text { Profit to } A: \$ 10 \mathrm{~m} \\\text { Profit to } B: \$ 10 \mathrm{~m}\end{array} & \begin{array}{l}\text { Profit to } A: \$ 5 \mathrm{~m} \\\text { Profit to } \mathrm{B}: \$ 0 \mathrm{~m}\end{array} \\\hline \begin{array}{l}\text { B bids } \\\$ 35 \text { million }\end{array} & \begin{array}{l}\text { Profit to } A: \$ 0 \\\text { Profit to } B: \$ 5 \mathrm{~m}\end{array} & \begin{array}{l}\text { Profit to } A: \$ 2.5 \mathrm{~m} \\\text { Profit to } B: \$ 2.5 \mathrm{~m}\end{array} \\\hline\end{array}$ FIGURE 11- 4
-Refer to Figure 11- 4. If Allstom and Bombardier co- operated with each other when bidding on the contract, then the likely outcome is that

A) each firm bids $50 million, and earns profit of $10 million.
B) Bombardier bids $35 million, and earns profit of $5 million, while Allstom bids $50 million and earns profit of $0.
C) Bombardier bids $50 million, and earns profit of $0, while Allstom bids $35 million and earns profit of $5 million.
D) each firm bids $35 million, and earns profit of $2.5 million.