The Atlanta Steel company must decide whether to buy all or part of its steel from the Gorgia Corporation. If Georgia provides prompt delivery of its steel it sells Atlanta Steel, Atlanta will make $ 2 million if it buys all its steel from Georgia and $ 1 million if it buys only part from Georgia. But if Georgia does not provide prompt delivery, Atlanta Steel will lose $ 50 million it it buys all steel trom Georgia and lose $ 1 million if it buys only a part from Georgia.

If it receives an order for all of Atlanta's steel requirements, Georgia will make $ 3 million if it provides prompt delivery and $ 2 million if it does not do so. If it receives an order for part of Atlanta's steel requirements, Georgia will make $ 2 million.

a) Set up the payoff matrix, making Atlanta the row player. Atlanta Steel has two strategies: Buy All (ALL) steel from Georgia and Buy Part (PART)of steel from Georgia. Likewise, Georgia has two strategies: Provide Prompt Delivery (PROMPT) and Not Provide Prompt Delivery (NOT PROMPT). Indicate the payoffs in terms of the profits and take care to use - signs for losses.

*It is not enough to just mark the cells for the equilibrium strategies*

Explain briefly as to what you are doing

1. What do you understand about the Nash equilibrium concept? Does this game have a Nash Equilibrium?
2. What do you understand about a Dominant strategy? Does each firm have a Dominant strategy?