=2(4-)M+p29+p2g+201-)2=pM3-92) The second lab is socially desirable only if M(3 )-K-K>5M-K→K<pM(15 So a Nash equilibrium of both firms doing R&d(where K pM(1-9) will be Pareto optimum from the societys point of view if K<pM(15、11p for p>0.75(since then pM(1.5-9)< pM(1-5), and always for P<0. 75. On the other hand, both firms doing R&d will not be socially optimum from the society's point of view if >K>pM(.5-111 for p>0.75 If both firms doing R&D is Pareto optimal from the firms'point of because K< pM(1-9p), then since pM(1.5-9p)>pM(1-p)it follows that double R&d will also be optimum from the societys point of view, but the reverse does not always necessarily hold since we may have that pM(15-4p)>K>pM(1-g