Define what will be the result of this sequential game

Assignment Help Macroeconomics

Reference no: EM13236514

Kindle tablet vs Ipad 2. There is rumor on the market that Amazon will release a new tablet device called Amazon Kindle, which will become a competitor of Ipad 2 from Apple. Let us consider a sequential game based on this story.
Suppose each firrm has to decide how much they want to charge for their devices and their prices will aect consumers' demand together. Let's assume P 1and P2are the prices of Ipad2 and Kindle tablet respectively. For Ipad 2 at price level P 1, the demand for Ipad will be 103P1P2, for Kindle at price level P2;the demand for Kindle will be 4 2P1 P2. There is no cost of producing these devices.

a. If Apple is the one who move first, what will be the result of this sequential game (that is to nd out their prices)? Do you think Amazon will release its tablet or not?

b. If Amazon is the one who move first, what will be the result of this sequential game? Do you think Amazon will release its tablet or not?

Reference no: EM13236514

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