Question

Netflix, Hulu and Amazon Prime are three streaming services that all offer a range of movies and TV shows. Together these three products dominate the online streaming market. Answer the following questions: a. In 2015 Netflix distributed its original show "Bojack Horseman", whilst Amazon Prime distributed "Transparent" and Hulu distributed "Deadbeat." These different TV shows are differentiated, is this an important feature of an oligopoly market? Type Y for Yes or N for No. b. Amazon and Netflix are bidding for the rights to a new TV Show called "Jimmy's Lectures." However, there are also other shows for which the two services wish to bid and as a result, they are trying to establish their bidding budget for the next year. Both realise that how much they spend on bidding depends on how much the other spends on bidding. Based on the payoff matrix below, what strategy will Netflix (the left player) adopt? Amazon is the top player. MB for Medium Budget or LB for Large Budget Type SB for Small Budget Small Budget Medium Budget Large Budget Small Budget 25, 25 40, 10 55, 3 Medium Budget 10, 40 20, 20 35, 8 Large Budget 3, 55 8, 35 15, 15 C. Does this game satisfy the criteria for a Prisoner's Dilemma? Type Y for Yes or N for No. d. To ensure the collectively optimal outcome, would Netflix and Amazon be better off by cooperating? Type Y for Yes or N for No

Answer 1

"Though products are differentiated we can comment on this feature as then TV shows are homogenous (by genre) differentiated. Hence yes we have strict Nash equilibrium (LB, LB) therefore Amazon & Netflix will choose = LB yes this game represents prisoner's dilemma because, in above Po > off U (SB, SB) > U (B, LB) that is (SB, SB) is pare to efficient pay off for both players. The same representation of prisoners dilemma where ""NE"" is no pare of optimal. \r\n if they collude then they will always try to got higher pay off by playing ""SB"" therefore (SB, SB) would be the result of coliseum therefore both players can better of therefore yes."