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Kodak & Fuji develop photographic film. Assume that there are no other significant manufactures, so that Kodak and Fuji constitute a duopoly (oligopoly). Assume that the firms can produce 500 or 750 rolls of film for a given market in a given quarter. Assume (1) that firms face the same cost structure; (2) that if both produce 500, then each will profit $16 per day; (3) that if Fuji produces 500 and Kodak 750, then Fuji earns $14 and Kodak earns $21; (4) that if both produce 750 rolls then each will profit $15. The remaining combination is implicit.
(a) Construct a game matrix for this scenario.
(b) Is there a Nash Equilibrium for this game? Why or why not.
(c) Suppose that Fuji & Kodak decide to collude. What level of output would be chosen? Why?
Figure 10-13 demonstrate the payoff matrix for the only 2-auto dealerships in a community, Jim's Autos and Tim's Autos. The matrix demonstrate the profits that each company would earn from selecting either a low price or a high price.
Describe the meaning of a Nash Equilibrium when companies are competing with respect to price. Explain why is the equilibrium stable?
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Consider the following data for a simultaneous move ggiven: If you advertise and your rival advertises, you will each earn 5 million dollar in profits.
Suppose you are a potential entrant into a market that previously has had entry blocked through the government. Your market research has estimated that the market demand curve for industry is
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Little Kona is a small coffee corporation that is planning entering a market dominated through Big Brew. Each corporation's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price.
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Assume you are one of two manufactures of tennis balls. Both you and your competitor have zero marginal costs. Total demand for tennis balls is
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