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Question
Vaxiboost is a new, generic pharmaceutical product sold by Sanitex and Toptabs. Both are considering their pricing decisions for the next year. Payoffs under different combinations of decisions are as follows:
If both Sanitex and Toptabs price high, both will receive profits of £3m in the coming year.
If Sanitex prices high and Toptabs prices low, Sanitex will receive profits of £0.7m and Toptabs will receive profits of £6m.
If Sanitex prices low and Toptabs prices high, Sanitex receceive profits of £5m and Toptabs will receive profits of £2m.
If both Sanitex and Toptabs price low, both will receive profits of £0.1m.
Draw a payoff matrix to show this information as a simultaneous one-shot game in which each pharmaceutical company has to make a decision without knowing what the other will do.
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