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Please help Game Theory Model: Two-Firm Payoff Matrix Suppose, Blue Oil Company & Red Oil Company are the only two oligopoly firms in the industry.

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Game Theory Model: Two-Firm Payoff Matrix Suppose, Blue Oil Company & Red Oil Company are the only two oligopoly firms in the industry. Blue Oil Company If both companies charge high price of $100 per barrel of oil, then both will split the high profit. $100 $50 If both companies charge low price of $50 per barrel of oil, then both Blue Profit will split the low profit. Blue Profit = $15 billion = $25 billion If only one company charges low price & its rival company does not, $100 then the company charging low price will make more profit and its Red Profit Red Profit rival will make less profit. = $15 billion = $5 billion Red Oil Company Q#1; What is the Dominant Strategy for: Blue Profit Blue Profit = $5 billion = $10 billion Red Oil Company: $50 Red Profit Red Profit Blue Oil Company: = $25 billion = $10 billion Q#2: Nash Equilibrium: $ Price for both companies. Q#3: Pareto Optimal: $ Price both companies

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