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  3. 3 20 points the quebec provincial government is to decide...

Question: 3 20 points the quebec provincial government is to decide...

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3. (20 points) The Quebec provincial government is to decide whether to extend the Metro Blue line from St Michel to Anjou. The values of the extension for people living in St Michel and Anjou are a and b respectively. The cost of construction is c > 0. The govt, wants to go ahead with the construction if and only if a+ b 〉 c. The values a and b are known by the residents of St. Michel and Anjou but not by the Govt.; c is known to everybody. To learn these values the Govt asks each neighbourhood St-Michel and Anjou) to submit the value of the construction to the locality. Given the submitted valuations va and vb, which need to be non-negative, the govt. constructs the bridge if and only if va+Vb 2 c, and tax St-Michel and Anjou ta(va, vb) and tb(va, vb) respectively. , where 0 otherwise. tb(va, Vb) 0 otherwise Find a dominant strategy equilibrium

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