Question
Suppose that two firms, Gary's Very Neat Stuff and Julie's Clean Sweep, are the only producers of a chemical used to dry clean wool sweaters.
Suppose that two firms, Gary's Very Neat Stuff and Julie's Clean Sweep, are the only producers of a chemical used to dry clean wool sweaters. Assume that each firm charges the same price for the chemical. Firms compete through promotion of their version of the chemical. Assume only two strategies are available to each firm?a limited promotional campaign and an extensive promotional campaign. The payoffs, in millions, are given below.
A. In the absence of a binding and enforceable agreement, determine Gary's dominant advertising strategy. Explain the answer.
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