Consider the following game in which Firms 1 and 2 simultaneously choose technology A (e.g., Android) or technology B (e.g., iOS). Let Profit, denote firm i's profit if both firms adopt echnology A, Profit BB denote firm i's profit if both firms adopt technology B, Profit; AB denote firm i's profit if both firm i adopts technology A and firm j adopts technology B, and finally Profit; BA denote firm i's profit if both firm i adopts technology B and firm j adopts technology A. Suppose: Profit₁ AB > Profit₁ BB: Profit₂AB > Profit₂AA;Profit₁ AA > Profit₁ BA and Profit₂ BB: Profit₂ BA What is the Nash equilibrium of the game?

Consider the following game in which Firms 1 and 2 simultaneously choose technology A (e.g., Android) or technology B (e.g., iOS). Let Profit, denote firm i's profit if both firms adopt echnology A, Profit BB denote firm i's profit if both firms adopt technology B, Profit; AB denote firm i's profit if both firm i adopts technology A and firm j adopts technology B, and finally Profit; BA denote firm i's profit if both firm i adopts technology B and firm j adopts technology A. Suppose: Profit₁ AB > Profit₁ BB: Profit₂AB > Profit₂AA;Profit₁ AA > Profit₁ BA and Profit₂ BB: Profit₂ BA What is the Nash equilibrium of the game?

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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