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Consider the following capacity expansion game between Porsche and BMW. BMW Do not Build Build Small Build Large Porsche Do Not Build 0,10 12,8 30,4

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Consider the following capacity expansion game between Porsche and BMW. BMW Do not Build Build Small Build Large Porsche Do Not Build 0,10 12,8 30,4 Build Small 8,12 11.11 20,5 Build Large 4.30 5,20 10,10 Assume that firms move simultaneously. What is the Nash equilibrium in pure strategies? Highlight BMW's equilibrium strategy: BMW does not build BMW builds small BMW builds large Question 50 (1 point) Consider the following capacity expansion game between Porsche and BMW. BMW Do not Build Build Small Build Large Porsche Do Not Build 0,10 12,8 30,4 Build Small 8,12 11,11 20,5 Build Large 4.30 5,20 10,10 Assume that firms move sequentially (Porsche moving first). What is the Nash equilibrium in pure strategies? Highlight Porsches' equilibrium strategy: Porsche does not build Porsche builds small Porsche builds large

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