Question

Two Firms, Wayne Enterprises and Stark Industries, are deciding which city to open new branches. The

three possible cities are Des Moines, Omaha, and Kansas City. The profits to be gained in each city are 50,

100, and 150, respectively. If a firm operates in a city alone, it takes all the profit. If both firms operate in

the same city, they split the proift equally. Each firms choose one city to enter simultaneously

Two firms, Wayne Enterprises and Stark Industries, are deciding which city to open new branches. The three possible cities are Des Moines, Omaha, and Kansas City. The profits to be gained in each city are 50, 100, and 150, respectively. If a firm operates in a city alone, t takes all the profit. If both firms operate in the same city, they split the profit equally. Each firms choose one city to enter simultancously. 2 Draw up the normal form game matrix for the market entry game, showing the possible payoffs for cach outcomc 2.b Write the best response functions for cach fi 2 Find all pure strategy Nash cquilibria