Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whetherto charge a high price ($25) or a low price ($17) for the new Miley Cyrus CDThese price strategies with corresponding profits are depicted in the payoff matrix to the right Target's profits are in red andWal Mart's are in blueTargefs dominant stratogy is to pick a price of sWal Mart's dominant strategy is to pick a price ofWhat is the Nash oquilbrium for this game?A A Nash oquilbrium does not exist for thes gameOB. The Nash equilibrium is for Target to choose a price of $25 and Wal-Mart to choose a price of $17OC The Nash oquilibrium is for Target and Wal-Mart to both choose a price of $17.The Nashi oquilbrium is for Target and Wal-Mart to bolth choose a price of $25OE The Nash equilibrium is for Target to choose a price of $17 and Wal-Mart to choose a price of $25.

ce strategies with corresponding protits are depicted in the payoff matrix to the right Target's profits afé IA Teu T's are in blue dominant strategy is to pick a price of $ dominant strategy is to pick a price of $ he Nash equilbrium for this game? Nash oquilbrium does not exist for thes game he Nash equilibrium is for Target to choose a price of $25 and Wal-Mart to choose a price of $17 he Nash equilibrium is for Target and Wal-Mart to both choose a price of $17. he Nash oquilibrium is for Target and Wal Mart to bolth choose a price of $25

ce strategies with corresponding protits are depicted in the payoff matrix to the right Target's profits afé IA Teu T's are in blue dominant strategy is to pick a price of $ dominant strategy is to pick a price of $ he Nash equilbrium for this game? Nash oquilbrium does not exist for thes game he Nash equilibrium is for Target to choose a price of $25 and Wal-Mart to choose a price of $17 he Nash equilibrium is for Target and Wal-Mart to both choose a price of $17. he Nash oquilibrium is for Target and Wal Mart to bolth choose a price of $25

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?
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