4. Use the Table below: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. Table: Nike and Reebok Sales Reebok Sale No Sale Reebok: $5M Sale Nike Nike: $5M Reebok: $IM Nike: $30M No Sale Reebok: $30M Reebok: $20M Nike: SIM Nike: $20M a.{9} Is there a Nash equilibrium in this game? If there is what is it, and if not, why not? b. (8.5) If Nike and Reebok were to collude to maximize joint profits, what decision should each firm pursue?
4. Use the Table below: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. Table: Nike and Reebok Sales Reebok Sale No Sale Reebok: $5M Sale Nike Nike: $5M Reebok: $IM Nike: $30M No Sale Reebok: $30M Reebok: $20M Nike: SIM Nike: $20M a.{9} Is there a Nash equilibrium in this game? If there is what is it, and if not, why not? b. (8.5) If Nike and Reebok were to collude to maximize joint profits, what decision should each firm pursue?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 4PA
Question

Transcribed Image Text:4. Use the Table below: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the
potential economic profits shown in the table.
Table: Nike and Reebok Sales
Reebok
Sale
No Sale
Reebok: $5M
Sale
Nike
Nike: $5M
Reebok: $IM
Nike: $30M
No Sale
Reebok: $30M
Reebok: $20M
Nike: SIM
Nike: $20M
a.{9} Is there a Nash equilibrium in this game? If there is what is it, and if not, why not?
b. (8.5) If Nike and Reebok were to collude to maximize joint profits, what decision should each firm pursue?
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