Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m)

 

 

Giga Company

Titanic Conglomerate

 

No Change

Refurbishment of existing stores

Large Expansion

No Change

    30, 40

     25, 35

   15, 24

Refurbishment of existing stores

    35, 30

     28, 32

   18, 33

Large Expansion

    12, 22

    18, 20

   20, 25

 

The Nash equilibrium:           

(A)       does not exist.

(B)       occurs when both firms choose Refurbishment of existing stores.             

(C)       occurs when both firms choose Large Expansion.

(D)       occurs when both firms choose No Change.

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