Question
Two auto repair shops compete against each other in a community. Both are considering an increase in prices charged for car repair services. Their interdependent
Two auto repair shops compete against each other in a community. Both are considering an increase in prices charged for car repair services. Their interdependent alternatives are described by the payoff matrix.
Firm 2 | |||
Increase | Not Increase | ||
Firm 1 | Increase | (9,16) | (8,15) |
Not Increase | (10,14) | (7,9) |
The optimal strategy for Firm 1 is to . (increase / not increase)
The optimal strategy for Firm 2 is to . (increase / not increase)
The Nash equilibrium payoff for Firm 1 is_______ , and for Firm 2 it is_______ .
Is this a prisoner's dilemma type game? (yes / no)
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
978-0538453257
