Air "R" Us Low price High price $20 profit $0 profit Low $20 profit $50 profit...
7. Untied and Air "R" Us are the only two airlines operating flights between Collegeville and Bigtown. That is, they operate in a duopoly. Each airline can charge either a high price or a low price for a ticket. The accompanying matrix shows their payoffs, in profits per seat (in dollars), for any choice that the two airlines can make. Air "R" Us Low price High price $20 profit s0 profit Low price $20 profit $50 profit $50 profit $40...
5. Suppose two firms A and B must decide whether to charge low or high price for a product. If both firms charge high price each firm earns a profit of 10. If both firms charge a low price, each firm earns zero profit. If firm A charges a low price while firm B charges a high price, firm A earns a profit of 50 while firm B has a loss of 10. If firm B charges a low price...
You operate in a duopoly in which you and a rival must simultaneously decide what price to advertise in the weekly newspaper. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3. If you charge different prices, the one charging the higher price loses $5 and the one charging the lower price makes $5. Your Rival Low Price High Price Low Price (0, 0) (5,...
Total Posts Unre Posts Forum Description 0 0 United Discussion 5 Oligopoly & Game Theory Low High Dalam 320 thousand - than High United 20th United 330 thousand Delta Delte catre 30 thousand 90 Low United 5-10 and Airlines often find themselves in price wars. Consider the above game: Delta and United are the only two airlines flying the route from Houston to Omaha. Each firm has two strategies: charge a high price or charge a low price a. What...
Dell and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If Dell and Sony both set high prices, Dell’s profit is $40 million and Sony’s profit is $35 million. If Dell sets high price and Sony sets low price, Dell’s profit is $25 million and Sony’s profit is $40 million. If Dell sets low price and Sony sets high price, Dell’s...
Question 1:
Timely strategies (red squares) High price Low price 10.5 1.5 Timely Busines is earning $15.0 million a year economic profit on a route on which it has a monopoly. Comfort Buslines is considering entering the market and operating on this route. Timely threatens to cut the price to the point at which Comfort will make no profit if it enters. Comfort determines that the payoff matrix for the game with Timely is the one shown in the table....
) Use the table below to answer the following
questions.
Table 2
Table 2 gives the payoff matrix in terms of economic profit for
firms A and B when there are two strategies facing each firm: (1)
charge a low price, or (2) charge a high price.
a) why the equilibrium in this game (played once) is a dominant
strategy equilibrium ?
b) In Nash equilibrium, what the economic profit firm A makes
?
c) If both firms could successfully...
Station B R с Two gas stations, A and B, are locked in a price war. Each player has the option of raising its price (R) or continuing to charge the low price (C). They will choose strategies simultaneously. If both choose C, they will both suffer a loss of $-10. If one chooses R and the other chooses C, (i) the one that chooses R loses many of its customers and earns $0, and (ii) the one that chooses...
Two companies, Chevron and Shell, are the only two gas stations
operating in a small town. Each company must simultaneously display
their prices, choosing between a high price and low price. The
profits each firm can potentially earn are displayed in the payoff
matrix displayed below:
a. What is Chevron’s most likely decision (what is their
dominant strategy)?
b. What is Shell’s most likely decision (what is their dominant
strategy)?
c. What is the most expected outcome (what is the...
Consider a pizza pricing game, in which one store (Donna’s Deep
Dish) is much larger than the other (Pierce’s Pizza Pies), and the
stores have to decide whether to price High or Low. The payoff
table for the game is:
The noncooperative dominant-strategy equilibrium is (High, Low),
yielding profits of 132 to Donna’s and 70 to Pierce’s, for a total
of 202. If the two could achieve (High, High), their total profit
would be 156+60=216, but Pierce’s would not agree...