PART B

Now consider another scenario in which the government allows both firms to enter the market at the same time in order to increase competition. This is a non-cooperative game which is played only once.

Each firm must decide whether to charge a high or low price in order to maximise its profits. The payoff matrix in the table below shows the corresponding profit of each player (in millions of dollars) depending on the action of their opponent. The following simultaneous game describes this scenario.

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