Perrier and Apollinaris. Perrier and Apollinaris are two companies that sell mineral water in Tampa, FL. Each company has a fixed cost of $5,000 per period, regardless whether they sell anything or not. The two companies are competing for the same market and each firm must choose a high price ($2 per bottle) or a low price ($1 per bottle). Here are the rules of the game: At a price of $2, 5,000 bottles can be sold for total revenue of $10,000. At a price of $1, 10,000 bottles can be sold for total revenue of $10,000. If both companies charge the same price, they split the sales evenly between them. If one company charges a higher price, the company with the lower price sells the whole amount and the company with the higher price sells nothing. Payoffs are total profits. In this case, Apollinaris has: no dominant strategy. Perrier has a dominant strategy of P=$1. a dominant strategy of P=$1. Perrier also has a dominant strategy of P=$2. a dominant strategy of P=$2. Perrier also has a dominant strategy of P=$2. a dominant strategy of P=$1. Perrier also has a dominant strategy of P=$1.
Perrier and Apollinaris. Perrier and Apollinaris are two companies that sell mineral water in Tampa, FL. Each company has a fixed cost of $5,000 per period, regardless whether they sell anything or not. The two companies are competing for the same market and each firm must choose a high
In this case, Apollinaris has:
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no dominant strategy. Perrier has a dominant strategy of P=$1. |
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a dominant strategy of P=$1. Perrier also has a dominant strategy of P=$2. |
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a dominant strategy of P=$2. Perrier also has a dominant strategy of P=$2. |
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a dominant strategy of P=$1. Perrier also has a dominant strategy of P=$1. |
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