(Scenario: Payoff Matrix for Two Computer Manufacturers) Use Scenario: Payoff Matrix for Two Computer Manufacturers. If both firms pursue their dominant strategies: Scenario: Payoff Matrix for Two Computer Manufacturers The following table provides the payoff matrix for two firms, Krazy Komputer and Komputer Koala. They are the only two firms in the industry and can either compete or cooperate with each other, with the following profit results reflecting their actions. Scenario: Payoff Matrix for Two Computer Manufacturers Komputer Koala 000 Cooperate Compete Cooperate Krazy Komputer Krazy's profit: $100 Koala's profit: $120 Krazy's profit: $75 Koala's profit: $75 Compete Krazy's profit: $75 Koala's profit: $75 Krazy's profit: $50 Koala's profit: $50 their joint profits are maximized. their joint profits are not maximized. their joint profits reflect an equal sharing of the total profits. neither can attain its largest possible profits since there are two dominant strategies for each firm.

(Scenario: Payoff Matrix for Two Computer Manufacturers) Use Scenario: Payoff Matrix for Two Computer Manufacturers. If both firms pursue their dominant strategies: Scenario: Payoff Matrix for Two Computer Manufacturers The following table provides the payoff matrix for two firms, Krazy Komputer and Komputer Koala. They are the only two firms in the industry and can either compete or cooperate with each other, with the following profit results reflecting their actions. Scenario: Payoff Matrix for Two Computer Manufacturers Komputer Koala 000 Cooperate Compete Cooperate Krazy Komputer Krazy's profit: $100 Koala's profit: $120 Krazy's profit: $75 Koala's profit: $75 Compete Krazy's profit: $75 Koala's profit: $75 Krazy's profit: $50 Koala's profit: $50 their joint profits are maximized. their joint profits are not maximized. their joint profits reflect an equal sharing of the total profits. neither can attain its largest possible profits since there are two dominant strategies for each firm.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter26: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 13E

See similar textbooks

Similar questions

2. Consider the following game. Assume that this game is played simultaneously and without collusion. The two companies are choosing between two strategies: go international or stay national. The outcomes of each strategy for each company are given the following payoff matrix: a) Find Nash equilibrium in this game. Interpret the equilibrium you found. b) What is the Chipco's dominant strategy, if it has one? How shall Chipco's payoffs change for it to not have a dominant strategy anymore?
19) The soft-drink industry is dominated by Coca-Cola and Pepsi and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during halftime of the Super Bowl. The table shows the payoff matrix of profits that each firm would receive from their advertising decision, given the advertising decision of their rival. Profits in each cell of the payoff matrix are given as (Coke, Pepsi). If each firm makes the decision to advertise on the Super Bowl independently, what is the Nash equilibrium of this game? Table: Coke and Pepsi Advertising Game Pepsi Super Bowl Ad No Super Bowl Ad Super Bowl Ad No Super Bowl Ad $800, $700 $1,500, $600 Coke $650, $900 $1,000, $800 O A. Both firms advertise during the Super Bowl. O B. Neither firm advertises during the Super Bowl. C. Pepsi advertises, but Coke does not advertise during the Super O Bowl. OD. Coke advertises, but Pepsi does not advertise during the Super Bowl.
16. Boeing is considering whether it should develop its next aircraft with a wide body (WIDE) or whether it should make it a long aeroplane (LONG). Airbus, Boeing's competitor, also has a choice between choosing WIDE or LONG. The payoffs to the two companies are shown in the payoff matrix below. What are the (pure strategy) Nash equilibrium in this game? (The first action in the brackets is the strategy of Boeing, while the second is Airbus's strategy.) Airbus WIDE LONG WIDE 40 for Airbus Boeing 50 for Boeing O for Airbus 0 for Boeing LONG 0 for Airbus 0 for Boeing 50 for Airbus 40 for Boeing a. (WIDE, WIDE) for Boeing and Airbus respectively) and (WIDE, LONG) b. (LONG, WIDE) and (WIDE, LONG) c. (WIDE, WIDE) d. (LONG, LONG) e. (WIDE, WIDE) and (LONG, LONG)
The payoff matrix below is for two firms, A and B, deciding the quantity of their output levels. What is the dominant strategy of each firm? icrosc Firm B Strategy High output Low output High output 100, 80 0, 125 Firm A Low output 65, 0 40, 65 Both firms produce low levels of output. DO cGill Both firms produce high levels of output. Temp Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. Order Article O Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. Neither firm has a dominant strategy. oy 00 halysis
5 Suppose there are only two electric vehicle producers–Tesla and BMW. Using game theory in microeconomics, explain whether BMWand Tesla willdesign the same charge plug or different plug. What factors should the firms take into consideration?
2. Using a payoff matrix to determine the equilibrium outcome Suppose that Flashfry and Warmbreeze are the only two firms in a hypothetical market that produce and sell air fryers. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for fryers. Flashfry Pricing High Low For example, the lower-left cell shows that if Flashfry prices low and Warmbreeze prices high, Flashfry will earn a profit of $15 million, and Warmbreeze will earn a profit of $3 million. Assume this is a simultaneous game and that Flashfry and Warmbreeze are both profit-maximizing firms. Warmbreeze Pricing High Low 11, 11 3,15 15,3 9,9 If Flashfry prices high, Warmbreeze will make more profit if it chooses a chooses a price. If Warmbreeze prices high, Flashfry will make more profit if it chooses a chooses a price. Considering all of the information given, pricing high If the firms do not collude, what strategies will…
2. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low High 11, 11 2, 18 Flashfone Pricing Low 18, 2 10, 10 For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $18 million, and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. If Flashfone prices high, Pictech will make more profit if it chooses a price, and if Flashfone prices low, Pictech will make more profit if it chooses a ▼ price. If Pictech prices high, Flashfone will make more profit if it chooses a price, and if Pictech prices low, Flashfone will make more profit if it chooses a ▼ price. Considering…
3. Consider a model of Cournot duopoly. Two firms produce an identical product. The inverse demand function for the product is given by p = 60-y, where y = y₁ + y2 is the sum of the quantity produced by the two firms. Production costs are zero for both firms. a) Find the quantity produced by each firm in the Nash equilibrium of this game. Find the price of the product and the profit of each firm. b) Now say that marketing guru Jim has a proposal for firm 1. He would be able to convince people that the two firms' products were in fact slightly different from each other, so that the amount produced by each firm would not impact the price of the other's product as much as it did before. The inverse demand function for each product would become P₁ = 60-9₁-92 and p2 = 60 - 92 - -9₁. What is the most that firm 1 would be willing to pay Jim to do this? Show your work and explain in a few sentences what you did to find your answer.
2. Using a payoff matrix to determine the equilibrium outcome Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters. Zipride Pricing High Low Citron Pricing High Low 10, 10 5, 16 16,5 For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $16 million, and Citron will earn a profit of $5 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms. 7,7 If Zipride prices high, Citron will make more profit if it chooses a price. If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing high True If the firms do not collude, what strategies will they end up choosing? O False price, and…
The table given below represents the payoff matrix of firms A and B, when they choose to produce low or high output. In each cell, the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs. Firm A Firm B Low Output High Output Low Output 60 50 20 10 High Output 30 40 40 30 Which of the following statements about the two firms must be true? 1. If Firm B produces low output, Firm A will also produce low output. 2. If Firm B produces high output, Firm A will produce low output. 3. If Firm A produces high output, Firm B will also produce high output. 4. If Firm A produces low output, Firm B will produce high output.
Consider a market with two firms, Kellogg and Post, that sell breakfast cereais. Both companies must choose whether to charge a high price ($5.00) or a low price ($3.00) for their cereals. These price strategies, with corresponding profits, are depicted in the payoff matrix to the right. Kellogg's profits are in red and Post's are in blue. What is the cooperative equilibrium for this game? Kelogg Price- $5.00 Price $3.00 OA The cooperative equilibrium is for Kelogg to choose a price of $3.00 and Post to choose a price of $5.00. OB. The cooperative equilibrium is for Kellogg and Post to both choose a price of $3.00. OC. The cooperative equilibrium is for Kellogg and Post to both choose a price of $5.00. OD. The cooperative equilibrium is for Kellogg to choose a price of $5.00 and Post to choose a price dk $3.00. OF Acooperative equilibrium does not exist for this game 00 Price= $5.00 1200 S000 $1.000 Post Is the cooperative equilibrium ikely to occur? $1.000 Price $3.00 450 The…
Game Theory. Consider the following scenario: Two cloth manufacturing companies, A and B. Firm A designs a few costumes, and they are confident enough that they will be sold quickly in the market, but after launching their designs, they make very little profit due to a lack of capital to promote their designs. Now firm B uses these designs and makes a significant profit due to its brand value. 1. Demonstrate that the situation IS a game (explain strategic interaction/conflict).