Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the...
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget:
(a) Does Synergy have a dominant strategy? Explain.
(b) Does Dynaco have a dominant strategy? Explain.
(c) Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at the definition of
Nash equilibrium.)
Homework Answers
Dominant strategy is the strategy that is optimal pay off for the firm irrespective of the behaviour of the other firm.
a). No, synergy does not have a dominant strategy. If Dynaco chooses small budget, Synergy is better off choosing small budget. If Dynaco chooses large budget, Synergy is better off choosing large budget.
b). Indeed Dynaco does have a dominant strategy. It will have large budget, irrespective of what budget Synergy has, it'll be better off.
c). Yes, this is a Nash equilibrium. Neither player can improve his or her payoff by unilaterally changing his or her strategy, given the other player's strategy. The Nash Equilibrium would be at (large budget, large budget) having pay-offs $30million, $20 million.
Add Answer to:
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the...
5. Suppose two firms A and B must decide whether to charge low or high price...
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...
Declining Industry: Consider two competing firms in a declining industry that cannot support both firms profitably....
Declining Industry: Consider two competing firms in a declining industry that cannot support both firms profitably. Each firm has three possible choices, as it must decide whether or not to exit the industry immediately, at the end of this quarter, or at the end of the next quarter. If a firm chooses to exit then its payoff is 0 from that point onward. Each quarter that both firms operate yields each a loss equal to -1, and each quarter that...
4. Suppose two airlines A and B must decide whether to discount a flight from Newark...
4. Suppose two airlines A and B must decide whether to discount a flight from Newark to LA. If both firms don't discount the flight each firm carns a profit of 20. If both firms discount the flight, each firm carns a profit of 10. If firm A discounts the flight while firm B doesn't, firm A earns a profit of 100 while firm B has a loss of 20. If fym B discounts the flight while firm A doesn't,...
There are two firms, Cope and Peski, in an oligopolistic industry. Each firm must decide whether...
There are two firms, Cope and Peski, in an oligopolistic industry. Each firm must decide whether or not to advertise during the Super Bowl this year. The diagram below represents the matrix of expected profit payoffs for each firm depending on which of the four possible outcomes becomes reality. The first number in each cell represents the expected profit for Peski given the relevant combination of strategies for each firm. The second number in each cell represents the expected profit...
The widget market is controlled by two firms: Acme Widget Company and Widgetway Manufacturing. The structure...
The widget market is controlled by two firms: Acme Widget Company and Widgetway Manufacturing. The structure of the market makes secret price cutting impossible. Each firm announces a price at the beginning of the time period and sells widgets at the price for the duration of the period. There is very little brand loyalty among widget buyers so that each firm's demand is highly elastic. Each firm's prices are thus very sensitive to inter-firm price differentials. The two firms must...
Two firms dominate the cellular phone carrier industry. Each quarter their advertising executives must decide if...
Two firms dominate the cellular phone carrier industry. Each quarter their advertising executives must decide if their advertising budget wllbe Big (S10m) or Small (S1m). If one company chooses Big while the other chooses Small, the company that chose Big will steal a significant portion of the other company's market share. If the two companies choose identical budgets, then their respective market shares will remain unchanged. The following payoff matrix represents the two companies' problem: ATT Verizon Small Bi 80M...
only two firms in the industry of eanera , A long time ago, Kodak and Fuji...
only two firms in the industry of eanera , A long time ago, Kodak and Fuji the identical cos t structure were thinking of advertising their product at an exhausting rate, a mild not advertising at all. Assume that currently they share a profit of $54 million each S60 million and by a mild rate $45 reaches $105 if both advertise By advertising at an exhausting rate results in a cost of million for each firm. On the other hand...
X fx alue Response (click on correct answer) Firm 1 Low Price High Price Low Price...
X fx alue Response (click on correct answer) Firm 1 Low Price High Price Low Price ons 7-9: Two firms face the payoff matrix on the right. The payoff in the upper right corners are for Firm 1 and the payoffs in the lower left corners are for Firm 2. Both firms decide simultaneously whether to set a high price or a low price. Both firms know its own and its rival's payoffs. Firm High Price 2 Dominant strategies are...
Consider two firms 1 and 2 engaging into the following one-shot game: if firm 1 advertises...
Consider two firms 1 and 2 engaging into the following one-shot game: if firm 1 advertises and firm 2 does not, firm 1 will make $20 million in profits and firm 2 will make $6 million. If firm 2 advertises and firm 1 does not, firm 1 will make $2 million and firm 2 will make $6 million. If firm 1 advertises and firm 2 advertises, each firm earns $10 million. If neither firm advertises, firm 2 will make $8...
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must...
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.85) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. V, and Pepsi's dominant Coke's dominant strategy is to pick a price of strategy is to pick a price of $ Coke...
Declining Industry: Consider two competing firms in a declining industry that cannot support both firms profitably. Each firm has three possible choices, as it must decide whether or not to exit the industry immediately, at the end of this quarter, or at the end of the next quarter. If a firm chooses to exit then its payoff is 0 from that point onward. Each quarter that both firms operate yields each a loss equal to -1, and each quarter that...
4. Suppose two airlines A and B must decide whether to discount a flight from Newark to LA. If both firms don't discount the flight each firm carns a profit of 20. If both firms discount the flight, each firm carns a profit of 10. If firm A discounts the flight while firm B doesn't, firm A earns a profit of 100 while firm B has a loss of 20. If fym B discounts the flight while firm A doesn't,...
Two firms dominate the cellular phone carrier industry. Each quarter their advertising executives must decide if their advertising budget wllbe Big (S10m) or Small (S1m). If one company chooses Big while the other chooses Small, the company that chose Big will steal a significant portion of the other company's market share. If the two companies choose identical budgets, then their respective market shares will remain unchanged. The following payoff matrix represents the two companies' problem: ATT Verizon Small Bi 80M...
only two firms in the industry of eanera , A long time ago, Kodak and Fuji the identical cos t structure were thinking of advertising their product at an exhausting rate, a mild not advertising at all. Assume that currently they share a profit of $54 million each S60 million and by a mild rate $45 reaches $105 if both advertise By advertising at an exhausting rate results in a cost of million for each firm. On the other hand...
X fx alue Response (click on correct answer) Firm 1 Low Price High Price Low Price ons 7-9: Two firms face the payoff matrix on the right. The payoff in the upper right corners are for Firm 1 and the payoffs in the lower left corners are for Firm 2. Both firms decide simultaneously whether to set a high price or a low price. Both firms know its own and its rival's payoffs. Firm High Price 2 Dominant strategies are...
Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.85) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. V, and Pepsi's dominant Coke's dominant strategy is to pick a price of strategy is to pick a price of $ Coke...
Most questions answered within 3 hours.
-
A 4.45 percent coupon municipal bond has 12 years left to
maturity and has a price...
asked 14 minutes ago -
13. In the book, “The Goal” to what country does Alex convince
Johnny the company should...
asked 16 minutes ago -
Write a simple Python program to find the day for the given
date. The procedure to...
asked 21 minutes ago -
5) A semi-permeable membrane is used to separate pyruvic acid
from an aqueous solution of 0.1...
asked 24 minutes ago -
The resistance of the body varies from approximately 500 kΩ
(when it is very dry) to...
asked 28 minutes ago -
Please explain how participation income and expenses are
allocated to each partner. Where is this defined?
asked 37 minutes ago -
The tires of a car make 61 revolutions as the car reduces its
speed uniformly from...
asked 53 minutes ago -
Peabody, Inc., sells fireworks. The company’s marketing director
developed the following cost of goods sold budget...
asked 57 minutes ago -
A signal transduction pathway includes the steps listed
below.
1. An inactive signal transduction molecule is...
asked 56 minutes ago -
1. The correlation coefficient determined for two variables has
a value of 0.89. Describe, in words,...
asked 1 hour ago -
The following data relate to direct materials costs for
November:
Actual costs
4,700 pounds at $5.35...
asked 1 hour ago -
Kyle, a 95.0 kg football player, leaps straight up into the air
(with no horizontal velocity)...
asked 1 hour ago