What secure strategies for firm a and firm b respectively

Reference no: EM13936123

The next three questions are based on the following game, where firms one and two must independently decide whether to charge high or low prices.

Firm One	Firm Two
	High Price
High Price	(10, 10)
Low Price	(5, -5)

1. Which of the following are Nash equilibrium payoffs in the one-shot game?

2. Which of the following are the Nash equilibrium payoffs (each period) if the game is repeated 10 times?

3. Suppose the game is infinitely repeated. Then the "best" the firms could do in a Nash equilibrium is to earn per period.

4. Consider the following entry game. Here, firm B is an existing firm in the market, and firm A is a potential entrant. Firm A must decide whether to enter the market (play "enter") or stay out of the market (play "not enter"). If firm A decides to enter the market, firm B must decide whether to engage in a price war (play "hard"), or not (play "soft"). By playing "hard", firm B ensures that firm A makes a loss of $1 million, but firm B only makes $1 million in profits. On the other hand, if firm B plays "soft", the new entrant takes half of the market, and each firm earns profits of $5 million. If firm A stays out, it earns zero while firm B earns $10 million. Which of the following are perfect equilibrium strategies?

Answer the next two questions based on the following payoff matrix:

Firm A	Firm B
	Low Price
Low Price	(10, 9)
High Price	(-10, 7)

5. What are the secure strategies for Firm A and Firm B respectively?

6. Which of the following is NOT true?

Reference no: EM13936123

Questions Cloud

Compute the cost of the market basket for each year : Assume that the market basket is defined as 1 hammer, 1 lawn mower, 1 unit of groceries for the year, and 2 bicycles. a. Compute the cost of the market basket for each year. Calculate the CPI four times. Use 2005 as the base year the first time, then..

Explain consumer guarantees under the competition : Describe who is and who is not a consumer under the Competition and Consumer Act 2010 - Explain four consumer guarantees under the Competition and Consumer Act 2010

Developing software for smile recognition : DEVELOPING THE SOFTWARE FOR SMILE RECOGNITION AND NOT FACE DETECTION - It should also cover other substantial development work such as requirements, analysis and design, and implementation or other documentation as agreed with your supervisor

Australian stock exchange : You may choose any company that is listed on the Australian Stock Exchange (ASX) - You must must choose a company from the ASX only though.

What secure strategies for firm a and firm b respectively : Which of the following are the Nash equilibrium payoffs (each period) if the game is repeated 10 times? Suppose the game is infinitely repeated. Then the "best" the firms could do in a Nash equilibrium is to earn per period.

What is the indirect rate of the euro : Indirect exchange rate. If the direct exchange rate of the euro is worth £0.685, what is the indirect rate of the euro? Note that the pound is the home currency.

What is the cross rate of the zloty with respect to yen : Cross exchange rate. Assume Poland's currency (the zloty) is worth £0.17 and the Japanese yen is worth £0.005. What is the cross (implied) rate of the zloty with respect to yen?

Design and implement a user interface in c# : Test the program and provide a list of comprehensive test cases used to validate the application and include these test cases in a word document containing all UML class diagram and descriptions. The test data can be shown in a table that includes..

Prepare information that may be used for a marketing plan : Prepare information that may be used for a marketing plan. Identifying one product/service from own or other business with which is familiar.

User Account

All Pages