It may seem as though basic static games are too simple to describe the strategic choices faced by modern transnational firms. Yet simple normal-form games apply to the case studies presented in both of the textbooks. Present your observation of what many of these cases have in common. This is your rule category. Point out the cases that are exceptions, if any, and why you think they are different from the others. This is your exception category. In response to your classmates' posts, explain what circumstances would have to change to move a case from the rule category to the exception category, or

It may seem as though basic static games are too simple to describe the strategic choices faced by modern transnational firms. Yet simple normal-form games apply to the case studies presented in both of the textbooks. Present your observation of what many of these cases have in common. This is your rule category. Point out the cases that are exceptions, if any, and why you think they are different from the others. This is your exception category. In response to your classmates' posts, explain what circumstances would have to change to move a case from the rule category to the exception category, or

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 15.6IP

See similar textbooks

Similar questions

Someone please clear my doubt.I have posted question and got answer,i attached the ques and ans(refer image). I can't understand how q1=19800 and q2=0 in equilibrium when the two actors have the same cost and revenue functions and they act simultaneously in a one-shot game. Intuitively one would guess that a cournot equillibrium would occur when q1=q2. Am I wrong i assuming that there can be no "player business that chooses to produce first" in a one-shot simultaneous game? What am i not understanding?
Assume there are two firms X and Y, considering which of two alternative prices to charge, £25 or £19 for X and £20 or £15 for Y. The firms make their decisions simultaneously: i.e. neither firm knows the price choice of its rival. The various profits are illustrated in the following pay-off matrix: Strategies and payoffs for X are in blue and for Y in red. (a) What is firm Y’s best response to each of the two different prices firm X could charge? Does firm Y have a dominant strategy? (b)What is firm X’s best response to each of the different prices firm Y could charge? Does firm X have a dominant strategy? (C) What is/are the Nash equilibrium/equilbria? What is the most likely outcome of this game? Explain your answer.
Suppose that there are two firms in a market, firm 1 and firm 2. The marketis declining in size. The game starts in period 0, and the firms can compete in periods 0, 1,2, 3, ... (i.e., indefinitely) if they so choose. Duopoly profits in period t for firm 1 are equalto 105 −10t, and they are 10.5 −t for firm 2. Monopoly profits (those if a firm is the onlyone left in the market) are 510 −25t for firm 1 and 51 −2t for firm 2. At the start of eachperiod, each firm must decide either to “stay in” or “exit” if it is still active (they do sosimultaneously if both are still active). Once a firm exits, it is out of the market forever andearns zero in each period thereafter. Firms maximize their (undiscounted) sum of profits.What is this game’s subgame perfect Nash equilibrium?
Suppose three Cournot competitors, each with costs Ci = 30qi, face an inverse market demand curve of P = 480 – 4Q. Suppose merging will not change costs. a. Find profits for the three firms. Note: Don’t round your answers. How will the profits change for F1 and for F2|3 if F2 and F3 merge? b. Suppose that after the merger occurs, F1 and the new firm F2|3 successfully collude at setting the monopoly price and output, and splitting the resulting monopoly profits. How, if at all, does this change the impact of the merger on F1 and on the merged firm?
H7. For q1=120-2p1-p2 and q2=120-2p2+p1, show that the duopolists have incentives to collude as well as find the -joint profit-maximizing price, output and profit and find each firm’s price, output and profit. What is the optimal defection of each firm, is collusion Nash equilibrium? Show in 2x2 matrix. Is it a prisoner’s dilemma?
a. What evidence is there to indicate that the UK supermarket business is an oligopoly? What further evidence might you need to be more certain that this is the case? b. Comment on the suggestion that Tesco’s position as price leader is being undermined. c. Other than price cutting, analyse the ways in which the Big Four might restrict the growth of new entrants such as Aldi and Lidl. d. Discuss the extent to which the stores wars described above is in the best interests of the UK consumers. The supermarket business in the UK is dominated by the so-called ‘Big Four’. Their market shares in March 2014 are shown below:Tesco .................. 28%Asda ................... 19%Sainsburys .......... 18%Morrisons ........... 11%Other established supermarkets, notably the Co-operative and Waitrose, are way behind with market shares of 5–6%. Over the year to March 2014, Tesco and Morrisons have lost out whilst the other two have hung on to retain or marginally increase their market share.…
You are the manager in a market composed of 20 firms, each of which has a 5.00 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors. a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market? b. Suppose that any two of these firms merge. What is the postmerger HHI? c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms?multiple choice It may but will also consider other factors. It likely will not. It likely will.
Industrial Organziation game - Business Strategy & Game theory Consider a game with competitive for market-share in a large region (a country or city). Firm 1 initially makes a decision to either compete in the Eastern (E) or Western (W) part of a region, or to opt out entirely (O). Once this decision has been made, Firm 1 and Firm 2 (who is already present in the region) simultaneously make a decision to be aggressive (A) or passive (P) in the region. Denote actions in the Eastern region without a prime (i.e. A and P) and those in the Western region with a prime (i.e. A` and P`). We'll make the following assumptions about these firms - If Firm 1 opts out, its payoff is 8 and the payoff for Firm 2 is 12 If Firm 1 ENTERS the Eastern region both firms receive 9 if both are AGGRESSIVE both firms receive 6 if both are PASSIVE if one plays AGGRESSIVE and the other plays PASSIVE, the aggresive firm gets 5 and the passive firm gets 2 If Firm 1 ENTERS the Western region…
Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 2,765. Case’s share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase? Based only on this information, do you think the Justice Department would challenge the merger? Explain.
Isabella runs an IT solutions business for her college peers and has only one competitor, Franco.Isabella and Franco have decided to collude andprovide monopoly-level output. Given that theyare both freshmen and intend to run their businesses for the next three years, is this agreementsustainable? Would your answer change if Francoknew he planned to transfer to another collegenext year?
Consider a bankruptcy game with two risk neutral players where V =$800,000, C1= $300,000 and C2=$800,000 a) What is the Kalai-Smorodinsky bargaining solution?
Two firms with differentiated products are competing in price. Firm A and B face thefollowing demand curves: Q_A = 70 − 2P_A + P_B and Q_B = 120 − 2P_B + P_Arespectively. Assume production is costless.a. Give equations for and graph each firm’s reaction curve.b. If both firms set their prices at the same time, what is the Nash equilibriumprice, quantity, and profit for each firm?c. Suppose A sets its price first and then B responds. What price and quantitydoes each firm set now? Is it advantageous to move first?d. Compare the profits from part b and c. Which firm benefits more from thesequential price choosing? (Please do b-d, thanks :))