Consider two competing firms, JR and OG. Suppose OG produces an estab- lished product and JR can either produce a clone or a differentiated product. If JR produces a clone, OG can either sue JR or not sue it. If JR produces a differentiated product rather than a clone, OG can either buy JR or not buy it. The two firms are in a non-cooperative game whose extensive form is rep- resented in the tree diagram below, where the payoffs on the right represent profits. -1 for OG 1 for JR sue OG don't sue -2 for OG clone 1 for JR JR don't clone 1 for OG -1 for JR buy OG don't buy 2 for OG 0 for JR If the two firms' managers are rational and recognize each other as rational, then (a) JR clones and OG sues (b) JR does not clone and OG buys (c) JR does not clone and OG does not buy (d) JR clones and OG does not sue (e) JR clones and OG sues with probability .5

Consider two competing firms, JR and OG. Suppose OG produces an estab- lished product and JR can either produce a clone or a differentiated product. If JR produces a clone, OG can either sue JR or not sue it. If JR produces a differentiated product rather than a clone, OG can either buy JR or not buy it. The two firms are in a non-cooperative game whose extensive form is rep- resented in the tree diagram below, where the payoffs on the right represent profits. -1 for OG 1 for JR sue OG don't sue -2 for OG clone 1 for JR JR don't clone 1 for OG -1 for JR buy OG don't buy 2 for OG 0 for JR If the two firms' managers are rational and recognize each other as rational, then (a) JR clones and OG sues (b) JR does not clone and OG buys (c) JR does not clone and OG does not buy (d) JR clones and OG does not sue (e) JR clones and OG sues with probability .5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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