(b) Two hotels, Hotel Sandy and Hotel Magda, are competing for a limited number of tourists. The hotels have approval to either expand hotel operations, or add recreational water sports to their offerings. No one hotel has approval do both of these changes. A research company has determined that the following outcomes are likely: If Hotel Sandy expands, and Hotel Magda adds water sports, Hotel Sandy will increase its market share by 1%, and Hotel Magda will increase its market share by 3%. If Hotel Sandy adds water sports, and Hotel Magda expands, Hotel Sandy will decrease its market share by 5%, and Hotel Magda will increase its market share by 2%. If both hotels add water sports, Hotel Sandy will increase its market share by 4%, and Hotel Magda will increase its market share by 5%. If both hotels expand, Hotel Sandy will increase its market share by 2%, and Hotel Magda will decrease its market share by 5%. Given that both hotels employ game theory, what course of action would each hotel take?

(b) Two hotels, Hotel Sandy and Hotel Magda, are competing for a limited number of tourists. The hotels have approval to either expand hotel operations, or add recreational water sports to their offerings. No one hotel has approval do both of these changes. A research company has determined that the following outcomes are likely: If Hotel Sandy expands, and Hotel Magda adds water sports, Hotel Sandy will increase its market share by 1%, and Hotel Magda will increase its market share by 3%. If Hotel Sandy adds water sports, and Hotel Magda expands, Hotel Sandy will decrease its market share by 5%, and Hotel Magda will increase its market share by 2%. If both hotels add water sports, Hotel Sandy will increase its market share by 4%, and Hotel Magda will increase its market share by 5%. If both hotels expand, Hotel Sandy will increase its market share by 2%, and Hotel Magda will decrease its market share by 5%. Given that both hotels employ game theory, what course of action would each hotel take?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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In 2006, the five leading suppliers of digital cameras in the United States were Canon,Sony, Kodak, Olympus, and Samsung. The combined market share of these five firmswas 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. Theown price elasticity for Canon’s cameras was –4.0 and the market elasticity of demandwas –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was$240 and that Canon’s marginal cost was $180 per camera. Suppose you were the CEO of Kodak, what would you do to avoid its business failure? Please apply the specific tools from managerial economics to the case analysis
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Two hotels, Hotel Sandy and Hotel Magda, are competing for a limited number of tourists. The hotels have approval to either expand hotel operations, or add recreational water sports to their offerings. Noone hotel has approval do both of these changes. A research company has determined that the following outcomes are likely:If Hotel Sandy expands, and Hotel Magda adds water sports, Hotel Sandy will increase its market share by 1%, and Hotel Magda will increase its market share by 3%.If Hotel Sandy adds water sports, and Hotel Magda expands, Hotel Sandy will decrease its market share by 5%, and Hotel Magda will increase its market share by 2%.If both hotels add water sports, Hotel Sandy will increase its market share by 4%, and Hotel Magda will increase its market share by 5%.If both hotels expand, Hotel Sandy will increase its market share by 2%, and Hotel Magda will decrease its market share by 5%.Given that both hotels employ game theory, what course of action would each hotel take?
In 2006, the five leading suppliers of digital cameras in the United States were Canon,Sony, Kodak, Olympus, and Samsung. The combined market share of these five firmswas 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. Theown price elasticity for Canon’s cameras was –4.0 and the market elasticity of demandwas –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was$240 and that Canon’s marginal cost was $180 per camera. Based on the above information, discuss industry concentration, demand and market conditions, and the pricing behavior of Canon in 2006 and explain how the industry environment significantly influence the performance of the digital camera firms
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