Does each firm have a dominant strategy and what

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Reference no: EM13242105

Two oligopoly firms are in the process of evaluating their marketing strategies. Firm 1 can generate estimated profits of $10mil. From strategy A if the second firm reacts by strategy C and $15mil. From Strategy A if the second firm reacts with strategy D. On the other hand, firm 1 may follow strategy B which could return profits of $8mil. Or $9mil. If firm 2 reacts with strategy C or D respectively. The second firms potential profits are $8 and $12mil. From strategy C depending on whether firm 1 undertakes strategy A or B and $7 and $8 mil. From strategy D, depending on whether firm 1 follows Strategy A or B.

a.) Construct the payoff table for the above industry.

b.) Does each firm have a dominant strategy? What is it?

c.) Does the industry move toward an equilibrium position? If so, where?

Reference no: EM13242105

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