12. Assume that two firms are competing for market share for a particular product. Each firm is considering what promotional strategy to employ for the coming period. Assume that the following paY-off matrix describes the increase in market share for firm A and decrease in market share for firm B.

Now,

(a) determine the optimal strategies for both the firms.

(b) determine the value of this game and state whether it is a strictly determinable and fair game.

(c) state whether as a manager of firm B would You adopt the policy prescribed in (a). Why or whYnot?
(

d) state whether the solution strategies obtained in (

a) above would necessarily maximize profit for either of them.

Transcribed Image Text:

Firm A's strategy No promotion Moderate promotion Price cut Firm B's strategy No promotion Moderate promotion High promotion 0 2 -15 12 8 -4 20 15 6