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Thereare two movie theaters in the town of Harkinsville: Modern Multiplex, which shows first-run movies, and Sticky Shoe, which shows movies that have been out
Thereare two movie theaters in the town of Harkinsville: Modern Multiplex, which shows first-run movies, and Sticky Shoe, which shows movies that have been out for a while at a cheaper price. The demand for movies at Modern Multiplex is given by QMM = 14 PMM + PSS, while the demand for movies at Sticky Shoe is QSS = 8 2PSS + PMM , where prices are in dollars and quantities are measured in hundreds of moviegoers. Modern Multiplex has a per-customer cost of $4, while Sticky Shoe has a per-customer cost of only $2. (1) Suppose that the game between Modern Multiplex and Sticky Shoe is simultaneous. Find the subgame perfect equilibrium price, quantity, and profit for each theater (2) Suppose that the game between Modern Multiplex and Sticky Shoe is sequential in which Modern Multiplex is the first mover. Find the subgame perfect equilibrium price, quantity, and profit for each theater
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