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Two window washing companies are planning their marketing strategies. Firm A has two options, low prices or high prices, while firm B has two options,
Two window washing companies are planning their marketing strategies. Firm A has two options, low prices or high prices, while firm B has two options, heavy TV advertising or heavy radio advertising. Let firm A's strategies be known as A1 and A2, while firm B's are known as B1 and B2. Firm A can earn $15 million in profits from strategy A1 if firm B responds with strategy B1, and $17 million in profit from A1 if B responds with strategy B2. Firm A can follow strategy A2, which returns $8 million if firm B responds with strategy B1 and $12 million if B responds with strategy B2. Firm B's potential profits would be $8 million and $6 million from strategy B1, depending on whether firm A implements strategy A1 or A2. Firm B's profits from strategy B2 would be $11 million or $13 million depending on whether firm A follows strategy A1 or A2. a. Construct the payoff table. b. Does either firm have a dominant strategy? Dominated? Is there a stable equilibrium
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