The new food delivery company DoorDash is thinking of entering New Zealand. Its rivalry is the existing UBER Eats. Both these companies simultaneously choose whether to operate in January, February, March, or April, or not to operate at all. Thus the strategy set for both these companies is {January, February, March, April, or Not to Operate}. Assume that the profit received by a monopolist in month m (where a monopoly means only one company is operating) is 10 x m – 15, whereas each duopolist (so both are operating) would earn 4 x m – 15. A company makes zero profit for any month that is not operating. Also, the value of m while calculating the profits for a particular month in the above equations is as follows {January = 1, February = 2, March = 3, April = 4}. The payoffs of the strategic form of this game are the sum of the profit of all the months. For example, if DoorDash operates in February and UBER Eats in March, then DoorDash earns zero profit in January; 5 (=10 x 2 - 15) in February; -3 (=4 x 3 – 15) in March; and 1 (=4 x 4 - 15) in April, for a total profit of $3. UBER Eats earns zero profit in January and February, -3 in March, and 1 in April, for a total profit of $-2. Then the payoffs (DoorDash, UBER Eats) = (February, March; 3, -2). a. Derive the strategic form b. Find the strategies that survive the IDSDS c. Find the Nash Equilibria.
Y5
The new food delivery company DoorDash is thinking of entering New Zealand. Its rivalry is the existing UBER Eats. Both these companies simultaneously choose whether to operate in January, February, March, or April, or not to operate at all. Thus the strategy set for both these companies is {January, February, March, April, or Not to Operate}. Assume that the profit received by a monopolist in month m (where a monopoly means only one company is operating) is 10 x m – 15, whereas each duopolist (so both are operating) would earn 4 x m – 15. A company makes zero profit for any month that is not operating. Also, the value of m while calculating the profits for a particular month in the above equations is as follows {January = 1, February = 2, March = 3, April = 4}.
The payoffs of the strategic form of this game are the sum of the profit of all the months. For example, if DoorDash operates in February and UBER Eats in March, then DoorDash earns zero profit in January; 5 (=10 x 2 - 15) in February; -3 (=4 x 3 – 15) in March; and 1 (=4 x 4 - 15) in April, for a total profit of $3. UBER Eats earns zero profit in January and February, -3 in March, and 1 in April, for a total profit of $-2. Then the payoffs (DoorDash, UBER Eats) = (February, March; 3, -2).
a. Derive the strategic form
b. Find the strategies that survive the IDSDS
c. Find the Nash Equilibria.
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