?1. Three stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 20 – 2S. Assume that patrols cost $12 per hour.
a) What is the socially efficient level of security?
b) Examine the (Nash) equilibrium level of security where each store independently decides how many security patrols it would purchase with its own budget. Please identify the total level of security patrols at the (Nash) equilibrium. That is, you do not need to identify the individual choice of security patrol.
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