Apple and Microsoft are competing over computer operating systems. Each can target their product to business or personal market. Apple will announce their new operating system before Microsoft decided on their operating systems next features. If Apple focuses on the personal market and Microsoft focuses on business Apple earns 100 million and Microsoft 150 million. If Microsoft focus on personal and Apple focuses on business Microsoft earns 90 million and Apple 200 million. If both focus on the personal market each earns 115 million and if both focus on the business market they each earn 125 million. Write a game tree for this game and find the equilibrium strategy and equilibrium payoffs clearly labeling both

Apple and Microsoft are competing over computer operating systems. Each can target their product to business or personal market. Apple will announce their new operating system before Microsoft decided on their operating systems next features. If Apple focuses on the personal market and Microsoft focuses on business Apple earns 100 million and Microsoft 150 million. If Microsoft focus on personal and Apple focuses on business Microsoft earns 90 million and Apple 200 million. If both focus on the personal market each earns 115 million and if both focus on the business market they each earn 125 million. Write a game tree for this game and find the equilibrium strategy and equilibrium payoffs clearly labeling both

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 15.3IP

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Suppose Telkomsel and Indosat are the only two firms in the internet market. They face the following payoff when the want to invest in the research budget: When both companies invest in small budget, Telkomsel will gain Rp 40 billion and Indosat will gain Rp 50 billion. When both of them invest in large budget, Telkomsel will gain Rp 20 billion and Indosat will gain Rp 30 billion. When Telkomsel invest in large budget and Indosat in small budget, Telkomsel will gain Rp 30 billion and Indosat will gain zero. When Telkomsel invest in small budget and Indosat in large budget, Telkomsel will gain zero and Indosat will gain Rp 70 billion. a). Draw the payoff matrix b). Is there a Nash Equilibrium for that case? Explain.
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult-only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. 1.State what market structure exists in Jamaica since the early 2000s. Explain if excess profit will exist in…
Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for the past few months, but now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser’s manager believes Kaiser can get away with cheating for two months, but he also believes that Kaiser would be punished for the next two months after cheating. After punishment, Kaiser’s manager expects the two firms would return to cooperation. Kaiser’s manager ignores the time-value of money and does not discount future benefits or costs. Will Kaiser cooperate or cheat? Explain.
Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for the past few months, but now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser’s manager believes Kaiser can get away with cheating for two months, but he also believes that Kaiser would be punished for the next two months after cheating. After punishment, Kaiser’s manager expects the two firms would return to cooperation. Kaiser’s manager ignores the time-value of money and does not discount future benefits or costs. 4. Suppose you were asked to manage a golf course that was currently charging a uniform price. Would you suggest that the course continue…
Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for the past few months, but now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser’s manager believes Kaiser can get away with cheating for two months, but he also believes that Kaiser would be punished for the next two months after cheating. After punishment, Kaiser’s manager expects the two firms would return to cooperation. Kaiser’s manager ignores the time-value of money and does not discount future benefits or costs. What is the monthly gain to Kaiser from cheating? What is the present value of the benefit from cheating for the two months of cheating?
Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for the past few months, but now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser’s manager believes Kaiser can get away with cheating for two months, but he also believes that Kaiser would be punished for the next two months after cheating. After punishment, Kaiser’s manager expects the two firms would return to cooperation. What is the monthly cost of punishment to Kaiser? What is the present value of the cost of cheating for the two months of punishment?
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. State what market structure exists in the hotel industry in Jamaica during the 1990s. Can excess profit be…
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. - State what market structure exists in the hotel industry in Jamaica during the 1990s. Can excess profit be…
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise inthe availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as touristshave gravitated to these more cost-effective options. How would you describe the economic phenomena that has occurred through the unspoken agreement between the main…
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise inthe availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as touristshave gravitated to these more cost-effective options. State what market structure exists in the hotel industry in Jamaica during the 1990s. Can excess profit be earned…
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. State what market structure exists in the hotel industry in Jamaica during the 1990s. Can excess profit…
During the 1990s, the Jamaican hotel industry was one dominated by three players: Sandals, RIU and Grande Bahia. The three firms have further distinguished themselves in niche categories such that Sandals offers discounts for children under thirteen, RIU is an adult only hotel and Grand Bahia caters specifically to couples. It is an increasingly competitive market whereby firms are fighting just to maintain current market share. However, when new firms attempted to enter the market, the main players had an unspoken agreement to keep prices within a certain range to ensure they maintained their stronghold in the industry. Since the early 2000s, there has been a rise in the availability boutique hotels as well as bookings via Airbnb. As a result, the three main players have seen a reduction in their market share as tourists have gravitated to these more cost-effective options. 1.State what market structure exists in the hotel industry in Jamaica during the 1990s. Can excess profit…