Suppose the studios choose their launch dates simultaneously

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Reference no: EM13239919

The demand for new movies peaks in the first couple days after opening then taper. Two key elements that affect demand are the season (Xmas and Summer are best times) and timing of other film releases. Both Studio Roxie and Midnight Flicks are producing action movies. The 2 studios must choose between releasing on November 10 or 17. If both films open November 10, each will sell 200,000 tickets. If one opens on November 10 and the other November 17, then the early release will sell 350,000 tickets, and the later release will sell 150,000. If both open November 18, each will sell 100,000 tickets.

a. Suppose the studios choose their launch dates simultaneously. Construct a game in normal form (payoff matrix) to illustrate the situation and identify the equilibrium/equilibria.

b. Is this situation a first-mover advantage? Explain your answer with a suitable game in extensive form.

Reference no: EM13239919

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