QUESTION: University Subs and Savory Sandwiches are the only two sandwich shops in a small college town.
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QUESTION: University Subs and Savory Sandwiches are the only two sandwich shops in a small college town. If neither runs a special 2-for-1 promotion, both are able to keep their prices high and earn $10,000 a month. However, when both run promotions, their profits fall to $1,000. Finally, if one runs a promotion and the other does not, the shop that runs the promotion earns a profit of $15,000 and the other loses $5,000. What is the dominant strategy for University Subs? Is there a Nash equilibrium in this example?
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