2.3 In Uganda, consumers are likely to buy cell phones from either MTN Rwanda Ltd or Tigo Rwanda Ltd because the two firms have a combined market share that approaches 90 percent.

These companies can either set a high price or set a low price. The payoff matrix shows how each company’s hypothetical economic profit depends on its price and its rival’s price. The hypothetical profits are in Ugandan shillings, and price-fixing cartels are illegal in Uganda.

a. Is there a pure-strategy Nash equilibrium? If so, what is it? Explain your answer.

b. Is there a mixed-strategy Nash equilibrium?
If so, what is it? Explain your answer.

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Tigo Rwanda MTN Rwanda Set High Price Set Low Price USH 100 billion USH 40 billion Set High Price USH 40 billion USH 60 billion USH 60 billion USH 80 billion Set Low Price USH 50 billion USH 20 billion