Firm A: High Price A: $6 В: $6 Low Price A: $8 High Price B: -$2 Firm B: A: -$2 B: $8 A: $0 B: $0 Low Price The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to keep their prices high. Assuming the game is played once, the Nash equilibrium outcome is where firm B charges the high price and firm A charges the low price firm A charges the high price and firm B charges the low price both charge the low price both charge the high price

Firm A: High Price A: $6 В: $6 Low Price A: $8 High Price B: -$2 Firm B: A: -$2 B: $8 A: $0 B: $0 Low Price The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to keep their prices high. Assuming the game is played once, the Nash equilibrium outcome is where firm B charges the high price and firm A charges the low price firm A charges the high price and firm B charges the low price both charge the low price both charge the high price

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 8MC

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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?
How do I determine values for Y that have dominant strategy? What is the Nash equilibirum? If the Market demand for two companies is P=120-Q and marginal cost is 20. How will the payoff matrix with strategies for each that show cournot equilibirum quantity/half of the monopoly quantity look? How do i solve for the nash equilibrium?
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.
10:04 PM cb = Chegg Economics Vo LTE expert.chegg.com/expertqna Time remaining: 00:09:49 Consider the following payoff matrix for two oligopolists that are deciding what quantity to produce: Firm 2 High Quantity Low Quantity $70k; $70k $130k; $20k High Quantity Firm 1 $20k; $130k $100k; $100k Low Quantity In the Nash equilibrium of this game, what are the payoffs to each firm? O a. Firm 1 receives $130k and Firm 2 receives $20k. O b. Firm 1 receives $20k and Firm 2 receives $130k. O c. Firm 1 receives $100k and Firm 2 receives $100k. O d. Firm 1 receives $70k and Firm 2 receives $70k. Answer Skip 4G Exit 2 ¹20%
. OPEC, the Organization of Petroleum Exporting Countries, was founded in 1969. Their original objective was to form a cartel to increase the price that they receive for their oil exports. Create a prisoner’s dilemma type game for two large members of OPEC (e.g. Saudi Arabia and Indonesia). Create numbers, where payoffs are total annual oil export revenues for each of these two countries. Verbally explain how you got your numbers. Find the Nash equilibrium. Based on this model, what strategy is in the oil exporters’ best interest (Nash or otherwise)? How do they make it happen? Create another prisoner’s dilemmamodel for all of OPEC on one side, and all non OPEC oil exporting nations on the other side. Create numbers, where payoffs are total annual oil export revenues for each of the two sides. Verbally explain how you created your numbers. Also create your numbers applying the fact that OPEC’s total production capacity is greater than total non OPEC exports…