Consider the following hypothetical case. Only Pfizer and a competitor, Astra-Zeneca, have
the ability to develop a COVID-19 vaccine. Both have access to the same two promising
vaccine technologies, but each company must choose one to invest in. While each firm
could develop a vaccine on its own, the problem is that the fixed cost of production and risk
are very high. They are therefore considering coordinating their actions through a strategic
alliance where they join forces and share cost and revenue equally. Analyse the interaction
between the two firms using game theory. Present a payoff matrix to model the situation
and analyse it for Nash equilibrium. What can either of these firms do to make their best,
most-preferred outcome more likely?