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Two companies, Budweiser and Miller, are the only two beer companies selling a product in a small town. Each company must simultaneously display their prices,
Two companies, Budweiser and Miller, are the only two beer companies selling a product in a small town. Each company must simultaneously display their prices, choosing between a high price and low price. The profits each firm can potentially earn are displayed in the payoff matrix displayed below:
\begin{tabular}{|c|c|c|c|} \cline { 3 - 4 } \multicolumn{2}{c|}{} & \multicolumn{2}{c|}{ Budweiser Decisions } \\ \cline { 2 - 4 } \multicolumn{2}{c|}{} & High Price & Low Price \\ \hline \multirow{4}{*}{ Miller Decisions } & \multirow{2}{*}{ High Price } & M: $6,000 & M: $2,000 \\ & B: $9,000 & B: $12,000 \\ \cline { 2 - 4 } & \multirow{2}{*}{ Low Price } & M: $9,000 & M: $4,000 \\ & & B: $5,000 & B: $6,000 \\ \hline \end{tabular}Step by Step Solution
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