Nestl's has over one hundred production facilities that all purchase hair nets and other hygienic supplies through independent suppliers.

Nestlé's has over one hundred production facilities that all purchase hair nets and other hygienic

supplies through independent suppliers. Nestlé created a centralized purchasing system that is

cumbersome to use has the potential to bargain for lower prices. Suppose that a division can

purchase hairnets for $8 independently. If they all purchase through the central system, hairnets

cost $6. But if one division uses the system and the other purchases independently, the cost to the

first is $9 while the cost to the second is $7. What does the simultaneous move game look like

and what is the equilibrium?