Question 1 assume the online retailing market is dominated by two firms Firms Alpha and Zeta These firms sell a similar line of products and have very similar prices However, one key strategic tool for each of them is advertising Assume the two firms each have just two possible advertising strategies spend a great deal of money on their advertising ( High ) or spend a modest amount on advertising ( Low ) If they both choose to have modest ( Low ) advertising budgets, they each have profits of $1,200 If they both have High advertising budgets, they incur greater costs So the two companies earn just $650 each in profits However, if Alpha has a Low advertising campaign and Zeta has a High advertising budget , Alpha has profits of $500 while Zeta has profits of $1,300 If Zeta has a Low advertising budget while Alpha has a High advertising budget, Zeta has profits of $700 while Alpha has profits of $1,300 This is a single play, non repeated game Construct a clear payoff matrix to describe this simple non cooperative game Fill the cells with the correct payoffs Please put Alpha on top and Zeta on the left side of your payoff matrix PLEASE EXPLAIN SEPARATE TO UNDERSTAND 2Is there a dominant strategy equilibrium PLEASE EXPLAIN SEPRATE 3 Is there are there Nash equilibrium equilibria PlEASE EXPLAIN SEPARATE TO UNDERSTAND 4 If the two firms were owned by a single owner, and acted as a monopoly in this market, what advertising budget decisions would Alpha and Zeta make What would be the monopoly profit (sum of the individual firms' profits) in this setting PlEASE EXPLAIN SEPARATE TO UNDERSTAND 5 if Alpha could credibly threaten to run a High advertising budget, what is the maximum Alpha would be willing to pay Zeta in order to buy them out of the market and operate the two firms as a monopoly What is the minimum that Zeta would be willing to accept to be bought out in this situation Please recall that this is a single play, non repeated game, so no present valuation of future stream of profits is necessary PlEASE EXPLAIN SEPARATE TO UNDERSTAND no additional table or attachment given the above information is given only

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Question 1 assume the online retailing market is dominated by two firms. Firms Alpha and Zeta . These firms sell a similar line of products

Question 1

assume the online retailing market is dominated by two firms. Firms Alpha and Zeta.

These firms sell a similar line of products and have very similar prices. However, one key strategic tool for each of them is advertising. Assume the two firms each have just two possible advertising strategies: spend a great deal of money on their advertising (High) or spend a modest amount on advertising (Low).

If they both choose to have modest (Low) advertising budgets, they each have profits of $1,200.
If they both have High advertising budgets, they incur greater costs. So the two companies earn just $650 each in profits.
However, if Alphahas a Low advertising campaign and Zetahas a High advertising budget, Alpha has profits of $500 while Zeta has profits of $1,300.
If Zeta has a Low advertising budget while Alpha has a Highadvertising budget, Zeta has profits of $700 while Alpha has profits of $1,300.

This is a single-play, non-repeated game.

Construct a clear payoff matrix to describe this simple non-cooperative game. Fill the cells with the correct payoffs. Please put Alpha on top and Zeta on the left side of your payoff matrix. PLEASE EXPLAIN SEPARATE TO UNDERSTAND

2Is there a dominant strategy equilibrium? PLEASE EXPLAIN SEPRATE

3 Is there/are there Nash equilibrium/equilibria?

PlEASE EXPLAIN SEPARATE TO UNDERSTAND

4. If the two firms were owned by a single owner, and acted as a monopoly in this market, what advertising budget decisions would Alpha and Zeta make? What would be the monopoly profit (sum of the individual firms' profits) in this setting? PlEASE EXPLAIN SEPARATE TO UNDERSTAND

5 if Alpha could credibly threaten to run a Highadvertising budget, what is the maximum Alpha would be willing to pay Zeta in order to buy them out of the market and operate the two firms as a monopoly? What is the minimum that Zeta would be willing to accept to be bought out in this situation? Please recall that this is a single- play, non-repeated game, so no present valuation of future stream of profits is necessary.