Problemtwo competing hospitals in small city can choose

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Reference no: EM13374809

Problem

Two competing hospitals in small city can choose whether to offer only basic health care, all-purpose care, or specialized care. The following payoff table denotes profits for each hospital:

987_Hospital merger to generate an increase in profit.png

a) Does either hospital have a dominant strategy (or any dominated strategy)? Assuming that they determine their strategies independently of one another, what are the hospitals' respective Nash equilibrium strategies? Explain why.

b) Suppose instead that the hospitals coordinate. What actions should they each take?

c) What general economic reasons might there be for a hospital merger to generate an increase in profit?

Reference no: EM13374809

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