Answered: Number of Other Chains with Chain's Own…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Three retail chains are each deciding whether to locate a store in town A or town B. The profit or payoff that a chain receives depends on the town selected and the number of other chains that put stores in that town; see accompanying table. (given)

a. Find a symmetric mixed-strategy Nash equilibrium in which chains
randomize.
b. Find all mixed-strategy Nash equilibria in which one of the chains puts
a store in town A for sure.
c. Find all mixed-strategy Nash equilibria in which one of the chains puts
a store in town B for sure.

Number of Other Chains with
Chain's Own Location
Stores in That Town
Chain's Profit
A
10
A
1
3
A
2
1
8
В
4
В
2
2

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