The company ProPower has a monopoly in the market of computer microprocessors. It is threatened by the entry of the company kewerier on this market. The company ProPower must decide today on the production technology for the new generation of processors, and knows that it is threatened by the potential entry of company kewerier. As for kewerier, it must also choose today whether or not to enter the microprocessor market, and it also knows which technologies ProPower is likely to choose today for the next generation of microprocessors. So, both companies have to make a decision. The choice of the installed firm. The ProPower company first chooses technology A or technology B for the development of the new generation of computer microprocessors. The choice of technology is important: it determines the production volume that ProPower will be able to sell on the market for the new generation of microprocessors. If Company ProPower chooses Technology A, it will necessarily produce a fixed quantity of putput, equal to qm. If it chooses technology B, it will If it chooses technology B, it will be able to choose from a set of production levels. Assuming that the potential entrant does not enter the market, firm ProPower will make a profit equal to 2000 billion S if it chooses technology A and 500 billion S if it chooses technology B. The choice of the potential entrant. Company kewerier, knowing the possible technological choices of company ProPower and decides whether or not to enter the market. If it enters and technology A has been chosen by firm Propower, it earns a profit on the market equal to 100 billion $. Company ProPower then makes a profit equal to 1000 billion $. If firm kewerier enters and the technology chosen by firm ProPower is technology B firm kewerier makes a profit equal to 500 billion S, and firm ProPower makes a profit equal to 500 billion S. On the other hand, if firm kewerier decides not to enter, it makes no profit. Q1) Represent the tree structure of this game Q2) Determine the Nash equilibrium of the game knowing that we are in perfect information. What type of Nash equilibrium is it? In this equilibrium, what is the technological choice of the company ProPower. 03) Does the potential entrant decide to enter the market or give up?
The company ProPower has a monopoly in the market of computer microprocessors. It is threatened by the entry of the company kewerier on this market. The company ProPower must decide today on the production technology for the new generation of processors, and knows that it is threatened by the potential entry of company kewerier. As for kewerier, it must also choose today whether or not to enter the microprocessor market, and it also knows which technologies ProPower is likely to choose today for the next generation of microprocessors. So, both companies have to make a decision. The choice of the installed firm. The ProPower company first chooses technology A or technology B for the development of the new generation of computer microprocessors. The choice of technology is important: it determines the production volume that ProPower will be able to sell on the market for the new generation of microprocessors. If Company ProPower chooses Technology A, it will necessarily produce a fixed quantity of putput, equal to qm. If it chooses technology B, it will If it chooses technology B, it will be able to choose from a set of production levels. Assuming that the potential entrant does not enter the market, firm ProPower will make a profit equal to 2000 billion S if it chooses technology A and 500 billion S if it chooses technology B. The choice of the potential entrant. Company kewerier, knowing the possible technological choices of company ProPower and decides whether or not to enter the market. If it enters and technology A has been chosen by firm Propower, it earns a profit on the market equal to 100 billion $. Company ProPower then makes a profit equal to 1000 billion $. If firm kewerier enters and the technology chosen by firm ProPower is technology B firm kewerier makes a profit equal to 500 billion S, and firm ProPower makes a profit equal to 500 billion S. On the other hand, if firm kewerier decides not to enter, it makes no profit. Q1) Represent the tree structure of this game Q2) Determine the Nash equilibrium of the game knowing that we are in perfect information. What type of Nash equilibrium is it? In this equilibrium, what is the technological choice of the company ProPower. 03) Does the potential entrant decide to enter the market or give up?
Computer Networking: A Top-Down Approach (7th Edition)
7th Edition
ISBN:9780133594140
Author:James Kurose, Keith Ross
Publisher:James Kurose, Keith Ross
Chapter1: Computer Networks And The Internet
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Transcribed Image Text:The company ProPower has a monopoly in the market of computer microprocessors. It is
threatened by the entry of the company kewerier on this market.
The company ProPower must decide today on the production technology for the new
generation of processors, and knows that it is threatened by the potential entry of company
kewerier.
As for kewerier, it must also choose today whether or not to enter the microprocessor
market, and it also knows which technologies ProPower is likely to choose today for the next
generation of microprocessors.
So, both companies have to make a decision.
The choice of the installed firm.
The ProPower company first chooses technology A or technology B for the development of
the new generation of computer microprocessors.
The choice of technology is important: it determines the production volume that ProPower
will be able to sell on the market for the new generation of microprocessors.
If Company ProPower chooses Technology A, it will necessarily produce a fixed quantity of
output, equal to qm If it chooses technology B, it will If it chooses technology B, it will be able
to choose from a set of production levels.
Assuming that the potential entrant does not enter the market, firm ProPower will make a
profit equal to 2000 billion $ if it chooses technology A
and 500 billion S if it chooses technology B.
The choice of the potential entrant.
Company kewerier, knowing the possible technological choices of company ProPower and
decides whether or not to enter the market.
If it enters and technology A has been chosen by firm Propower, it earns a profit on the
market equal to 100 billion $. Company ProPower then makes a profit equal to 1000 billion $.
If firm kewerier enters and the technology chosen by firm ProPower is technology B
firm kewerier makes a profit equal to 500 billion S, and firm ProPower makes a profit equal to
500 billion S. On the other hand, if firm kewerier decides not to enter, it makes no profit.
Q1) Represent the tree structure of this game
Q2) Determine the Nash equilibrium of the game knowing that we are in
perfect information.
What type of Nash equilibrium is it? In this equilibrium, what is the
technological choice of the company ProPower.
Q3) Does the potential entrant decide to enter the market or give up?
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