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Mako and Productux are the only suppliers of the good Balora, a good with no substitutes. The following payoff matrix shows the estimated profits
Mako and Productux are the only suppliers of the good Balora, a good with no substitutes. The following payoff matrix shows the estimated profits if each company advertises or not. Productux Mako Advertise Advertise Not Advertise $50, $55 $25, $75 Not Advertise $75, $25 $20, $15 a. Does Mako have a dominant strategy to advertise, not advertise, or no dominant strategy? b. Does Productux have a dominant strategy to advertise, not advertise, or no dominant strategy? c. Identify any Nash equilibria in the payoff matrix. d. Advertising costs decrease by $30. Draw a new payoff matrix reflecting the change. e. Assuming no cooperation, what will the profit be for each company after the decrease in advertising costs?
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