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Two rms A and B manufacture video game consoles. Firm A's console is less tech- nologically advanced than that of rm B, and rm A
Two rms A and B manufacture video game consoles. Firm A's console is less tech- nologically advanced than that of rm B, and rm A knows that if consumers get to choose between both consoles at the same time, they would choose the console of rm B. Therefore, rm A's only chance to sell a large number of consoles is to release it at a different time than rm B. Firm B prefers to release the console at the same time as rm A to benet from the hype and blog reviews. Suppose rst that the rms have to commit to a release date in advance. Firms can choose to release the console either in October or in December. Therefore, while the game has some dynamic aspect, we can think of the choice of the release date as a simultaneous move game, represented by the payoff matrix below. A \\ B October December October (10, 100) (100. 50) December (50, 50) (10, 100)
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