Keep Prices Advertise (15,5) Lower Prices O Advertise; lower prices Firm 1 Not advertise; lower prices Advertise; keep prices Not advertise; keep prices Firm 2 Not Advertise (4.6) Consider the above extensive form game. The subgame perfect Nash-equilibrium is Keep Prices Lower Prices (6,10) (5,11)

Keep Prices Advertise (15,5) Lower Prices O Advertise; lower prices Firm 1 Not advertise; lower prices Advertise; keep prices Not advertise; keep prices Firm 2 Not Advertise (4.6) Consider the above extensive form game. The subgame perfect Nash-equilibrium is Keep Prices Lower Prices (6,10) (5,11)

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 17P

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Question

Keep Prices
Advertise
Lower Prices
(4.6)
Firm 1
Advertise; lower prices
Not advertise; lower prices
Advertise; keep prices
Not advertise; keep prices
Firm 2
Not Advertise
Keep Prices
(15,5)
Consider the above extensive form game. The subgame perfect Nash-equilibrium is
Lower Prices
(6,10)
(5,11)

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