Assume that Nike and Adidas are the only sellers of athletic footwear in the United States. They are deciding how much to charge for similar shoes. The two choices are “High” (H) and “Outrageously High” (OH). Nike’s payoffs are in the lower left of each cell in the payoff matrix below:

a. Do both companies have dominant strategies? If so, what are they?

b. What will be the outcome of the game?

c. If Nike becomes the acknowledged price leader in the industry, what will be its dominant strategy? What will be the outcome of the game?Why?

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Adidas он $500,000 $300,000 $1 mil $1.7 mil Nike $550,000 $600,000 он 5800,000