Question 13 Problem 3.2: Consider three countries, A, B, and C, playing a tariff-setting game. Each country faces an incentive to use a tariff to capture a terms-of-trade gain but generates deadweight loss in the process. The first table below corresponds to outcomes when C plays "Tariff" and the second table below corresponds to outcomes when C plays "No Tariff." In both tables, A is the row player and B is the column player. The triple (a,b,c) in each cell corresponds to the payoff to A, B, and C for that cell's outcome, respectively. A\B Tariff No Tarff A\B Tariff Table 1: C plays "Tariff" Tariff No Tariff (7,7,7) (17,4,4) (4,17,7) (4,4,17) Table 2: C plays "No Tariff" Tariff (14,14,7) No Tariff (30,7,4) (7,7,17) No Tarff (7,14,4) How many Nash equilibria does this game have? Please write either "0" or "1" or "2" or "3" or "4" or "5" or "6" or "7" or "8" without the quotation marks.
Question 13 Problem 3.2: Consider three countries, A, B, and C, playing a tariff-setting game. Each country faces an incentive to use a tariff to capture a terms-of-trade gain but generates deadweight loss in the process. The first table below corresponds to outcomes when C plays "Tariff" and the second table below corresponds to outcomes when C plays "No Tariff." In both tables, A is the row player and B is the column player. The triple (a,b,c) in each cell corresponds to the payoff to A, B, and C for that cell's outcome, respectively. A\B Tariff No Tarff A\B Tariff Table 1: C plays "Tariff" Tariff No Tariff (7,7,7) (17,4,4) (4,17,7) (4,4,17) Table 2: C plays "No Tariff" Tariff (14,14,7) No Tariff (30,7,4) (7,7,17) No Tarff (7,14,4) How many Nash equilibria does this game have? Please write either "0" or "1" or "2" or "3" or "4" or "5" or "6" or "7" or "8" without the quotation marks.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 13
Problem 3.2: Consider three countries, A, B, and C, playing a tariff-setting game.
Each country faces an incentive to use a tariff to capture a terms-of-trade gain but
generates deadweight loss in the process. The first table below corresponds to
outcomes when C plays "Tariff" and the second table below corresponds to
outcomes when C plays "No Tariff." In both tables, A is the row player and B is the
column player. The triple (a,b,c) in each cell corresponds to the payoff to A, B, and C
for that cell's outcome, respectively.
A\B
Tariff
No Tarff
A\B
Tariff
Table 1: C plays "Tariff"
Tariff
No Tariff
(7,7,7)
(17,4,4)
(4,17,7)
(4,4,17)
Table 2: C plays "No Tariff"
Tariff
(14,14,7)
No Tariff
(30,7,4)
(7,7,17)
No Tarff
(7,14,4)
How many Nash equilibria does this game have?
Please write either "0" or "1" or "2" or "3" or "4" or "5" or "6" or "7" or "8" without
the quotation marks.
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