大哥大姐:

帮帮我.这道题怎么做.明天考试,这是例题.

Suppose a Japanese firm makes an investment in Belgium in the sense that they buy an overpriced piece of land for 100,000 Euro and put a factory hall on it for another 200,000 Euro. They paid too much for the land and the factory hall because they were not well informed on local prices. The resale price of land and factory today would be around 250,000 Euro rather than the 300,000 Euro they paid for it.

At the time when the factory was being built, local environmental taxes were low and in the order of 10,000 Euro a year, but now there is a new mayer in town and he has doubled the taxes to 20,000 a year. The Japanese firm is not happy about this and says to the new mayer: “Either you lower taxes again or we pull out of Belgium, sell our factory and move somewhere else”. What would you advise the mayer to do? Explain in game theory terms.