Consider the problem of PEI and NB, who are competing for the tourists arriving from Ontario and the Northeast U.S. If both choose to subsidize tourism by $15,000,000 (each); they will receive additional tourism revenue of $17,000,000 (each). If one province subsidizes tourism, but the other does not; the province with the subsidy will receive additional tourism revenue of $10,000,000 while the other will receive additional revenue of $3,000,000. a) If each province has the choice of subsidize or not, set up the payoff matrix for the game. b) Does either province have a dominant strategy? c) Is the outcome of this game optimal for the provinces?

Consider the problem of PEI and NB, who are competing for the tourists arriving from Ontario and the Northeast U.S. If both choose to subsidize tourism by $15,000,000 (each); they will receive additional tourism revenue of $17,000,000 (each). If one province subsidizes tourism, but the other does not; the province with the subsidy will receive additional tourism revenue of $10,000,000 while the other will receive additional revenue of $3,000,000. a) If each province has the choice of subsidize or not, set up the payoff matrix for the game. b) Does either province have a dominant strategy? c) Is the outcome of this game optimal for the provinces?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1.3CE

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