7.2. THE MOVIE RELEASE GAME. Consider the example at the beginning of the chap- ter. Suppose that there are only two blockbusters jockeying for position: Warner Bros.'s Harry Potter and Fox's Narnia. Suppose that blockbusters released in November share a total of $500 million in ticket revenues, whereas blockbusters released in December share a total of $800 million. (a) Formulate the game played by Warner Bros. and Fox. (b) Determine the game's Nash equilibrium(a). GAM

7.2. THE MOVIE RELEASE GAME. Consider the example at the beginning of the chap- ter. Suppose that there are only two blockbusters jockeying for position: Warner Bros.'s Harry Potter and Fox's Narnia. Suppose that blockbusters released in November share a total of $500 million in ticket revenues, whereas blockbusters released in December share a total of $800 million. (a) Formulate the game played by Warner Bros. and Fox. (b) Determine the game's Nash equilibrium(a). GAM

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 17P

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Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?
Consider the example at the beginning of the chap- ter. Suppose that there are only two blockbusters jockeying for position: Warner Bros.'s Harry Potter and Fox's Narnia. Suppose that blockbusters released in November share a total of $500 million in ticket revenues, whereas blockbusters released in Decembershare a total of $800 million(a) Formulate the game played by Warner Bros. and Fox.
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Consider a situation where two firms, 1 and 2, compete by choosing prices simultaneously. Theycan either compete (charge a low price) or cooperate (collude, charging a high price). The firmsplay this competition game repeatedly and indefinitely, using a grim trigger strategy toincentivize cooperation. They use the same interest rate, i, to discount future payoffs. Payoffsare $4,050 when both firms cooperate and $3,600 when they compete. If one firm charge a lowprice while the other charges a high price, the firm charging the low price gets $7,200, and theother gets zero, but now assume there is a 10% chance that aregulatory agency will give both firms a $1,500 fine in each period if they are caught colluding.Find the condition on the interest rate, i , necessary for sustaining the cooperative equilibrium.Which of the following statements is correct?(a) For any i < 1/7 the firms will cooperate.(b) For any i < 1/11 the firms will cooperate.(c) For any i > 1/11 the firms will…