Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2 questions and based on the same graphic Use the game payoffs in the table below to answer the following TWO questions (Q7 and Q8).

2 questions and based on the same graphic

image text in transcribedimage text in transcribedimage text in transcribed
Use the game payoffs in the table below to answer the following TWO questions (Q7 and Q8). Suppose that we have a situation where two firms produce the same product. They must decide where to locate stores in a certain city. Suppose that each is considering locating stores in one of four communities: A, B, C, and D. Their payoffs are contained in the following matrix. Firm 2 A B C D A 0.1 2,2 3.0 1,3 Firm 1 B 1,3 3.1 4,2 4.4 C 1,3 5.6 2,0 2,1 D 0,5 2,3 2,1 3,1What is (are) the Cournot Nash equilibrium (equilibria) when the two firms make simultaneous decisions? There is no pure strategy Nash equilibrium. (Firm 1, Firm 2) = (C, B) O (Firm 1, Firm 2) = (B, D) O (Firm 1, Firm 2) = (B, D) and (C, B) O (Firm 1, Firm 2) = (B, C) and (D, B)What is (are) the Stackelberg Nash equilibrium (equilibria) when Firm 1 makes the decision FIRST and Firm 2 moves later? O (Firm 1, Firm 2) = (C, B) O There is no pure strategy Nash equilibrium. O (Firm 1, Firm 2) = (B, C) and (D, B) O (Firm 1, Firm 2) = (B, D) O (Firm 1, Firm 2) = (B, D) and (C, B)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Land Economics Research

Authors: Joseph Ackerman, Marion Clawson, Marshall Harris

1st Edition

1317340426, 9781317340423

More Books

Students also viewed these Economics questions