Determine what is the nash equilibrium

Reference no: EM132206551

Question: Netflix, Hulu and Amazon Prime are three streaming services that all offer a range of movies and TV shows. Together these three products dominate the online streaming market.

Answer the following questions:

a. The average monthly subscription for these online accounts is eight dollars. Considering the relation between this price, and marginal cost for streaming, is it likely that price will exceed MC in this scenario?___ . Type Y for Yes or N for No.

b. Amazon and Netflix are bidding for the rights to a new TV Show called Jimmy's Lectures. However, there are also other shows for which the two services wish to bid and as a result, they are trying to establish their bidding budget for the next year. Both realise that how much they spend on bidding depends on how much the other spends on bidding. Based on the payoff matrix below, what is the Nash equilibrium? ___ .

Type your answer in the following format: strategy of left player, strategy of top player. For example, enter your answer as SS for (Small, Small) or SM for (Small, Medium) or MM for (Medium, Medium) etc. If a Nash Equilibrium does not exist, enter N for None.

	Small Budget (S)	Medium Budget (M)	Large Budget (L)
Small Budget (S)	25, 25	10, 40	3, 55
Medium Budget (M)	40, 10	20, 20	8, 35
Large Budget (L)	55, 3	35, 8	15, 15

c. In the event where Amazon and Netflix decided to bid for completely different shows over the next year, would the payoff matrix be useful? ___ . Type Y for Yes or N for No.

Reference no: EM132206551

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