Which one makes more sense

Reference no: EM133706631

Question: It turns out that Company XYZ can partner up with another company to develop product B and earn a profit of $150K if Company ABC goes for product A. How does this change the equilibria? Answer: This changes the equilibria, because now there is only one equilibria in pure strategies: (B,B). Since now XYZ would receive profits of $150K if they produce product B when ABC produces product A, they are now incentivized to produce product B as they would now receive higher products than if they produced the same product A as ABC company. 4. Company ABC thinks that it must react to this latest development (question 3) and is considering three options: 1) reduce the licensing fees for product A by $100K, 2) make a first move to launch the production of product A or, 3) implement a combination of both measures. Which one makes more sense?

Reference no: EM133706631

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