Two rival companies in a niche of the food industry are considering switching to all organic product lines. If both switch to organic, X will profit by 10 and Y by 2. If both remain non-organic, then X will profit by 15 and Y 5. If X switches to organic while Y does not, then X will profit by 20 and Y will only breakeven. If X remains non-organic while Y switches then X will breakeven and Y will profit by 25. Both companies MUST turn a profit. Use this information to FIRST complete the pay-off matrix at the bottom.

Is the matrix below symmetrical? yes no

What is the best strategy for company X? organic non-organic

Is company X's best strategy a dominant strategy? yes no

What is the best strategy for company Y? organic non-organic

Is company Y's best strategy a dominant strategy? yes no

The probable outcome is profit of ___________ for X and ___________for Y

Is this probable outcome a Nash equilibrium? yes no

Does a collusion opportunity exist? yes no

If yes, then it requires X to be org. or non-org. and Y org. or non-org. (circle one for each!)

The collusion outcome is profit of ___________ for X and ___________for Y

X organic 0-50070