Question
Suppose the firms move sequentially: Coles sets its bread price first and after observing the price set by Coles, Woolworths sets its bread price accordingly.
Suppose the firms move sequentially: Coles sets its bread price first and after observing the price set by Coles, Woolworths sets its bread price accordingly. Draw a game tree and find the SPNE(subgame perfect nash equilibrium) of this sequential move game.
| Woolworths | ||
| Coles | $1.3 | $1.5 |
| $1.3 | 1.5 ; 1.5 | 2.3 ; 1.1 |
| $1.5 | 1.1 ; 2.3 | 2.2 ; 2.2 |
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Economics
Authors: Roger A. Arnold
11th edition
1133561675, 978-1133561675
