This is a closed-book exam. The exam lasts for 180 minutes. Please write clearly and legibly. Be especially careful in the definition of the game, the payoff function and the equilibrium notions. The allocated points are also a good indicator for your time budget. Please record the answer for each question in a separate bluebook.

The core industries of the new information economy are characterized by imperfect competition, asymmetric information or external effects. Thus, well-designed microeconomic policies, in the form of competition policies, technology policies or combinations of these, have strong potential of generating welfare improvements and promoting social efficiency. This paper emphasizes innovation-intensiv...