Sony and Zenith must each decide which technology to utilize in building their 2019 model high definition television (HDTV) sets: either Alpha technology or Beta technology. Sony has a technological advantage in using Alpha technology and Zenith has a technological advantage in using Beta technology. The payoff table below shows the profit outcomes for both firms in the various possible technology choice outcomes: Sony's technology Multiple Choice O does; does O Alpha $11, $10 $9, $8 $13, $15 Payoffs in billions of dollars of profits Suppose the technology decision will be made sequentially. Sony O Beta does; does not does not; does A does not; does not Zenith's technology Alpha $16, $12 C B Beta D (does, does not) possess a first-mover advantage, and Zenith (does, does not) possess a first-mover advantage

Sony and Zenith must each decide which technology to utilize in building their 2019 model high definition television (HDTV) sets: either Alpha technology or Beta technology. Sony has a technological advantage in using Alpha technology and Zenith has a technological advantage in using Beta technology. The payoff table below shows the profit outcomes for both firms in the various possible technology choice outcomes: Sony's technology Multiple Choice O does; does O Alpha $11, $10 $9, $8 $13, $15 Payoffs in billions of dollars of profits Suppose the technology decision will be made sequentially. Sony O Beta does; does not does not; does A does not; does not Zenith's technology Alpha $16, $12 C B Beta D (does, does not) possess a first-mover advantage, and Zenith (does, does not) possess a first-mover advantage

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 3MC

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Please no written by hand solutions Suppose that the pricing strategies for FiberOne and of Starlink are shown in the table below. They have to decide whether to charge a high or low price for their internet service. The four pairs of payoff values show what each company expects to earn or lose in millions of dollars, depending on what the other company does. FiberOne’s Price Strategy Starlink’s Price Strategy High Price Low Price High Price Starlink+$200 FiberOne +$200 Starlink+$500 FiberOne - $100 Low Price Starlink-$100 FiberOne + 500 Starlink+$100 FiberOne +$100 If it’s expected that the incomes of people living in rural Nigeria is expected to increase, what will the equilibrium outcome be, ceteris paribus? a) a) Starlink will charge a low price; FiberOne will charge a high price. b) b) Starlink will charge a high price; FiberOne will charge a low price. c) c) Both Starlink and FiberOne will charge a low price. d) d) Both Starlink and FiberOne will charge a high price.
The U.S. government has decided to build a new off ramp for Interstate 5 in California. Exxon and Shell are both interested in building a gas station near the new off ramp. They can build the gas station near the off ramp for northbound traffic or they could build the gas station near the off ramp for southbound traffic. The profits for each outcome are illustrated in the accompanying payoff table: Shellnorthbound Shellsouthbound Exxon northbound Exxon receives$60,000 profitShell receives$50,000 profit Exxon receives$110,000 profitShell receives$100,000 profit Exxonsouthbound Exxon receives$80,000 profitShell receives$120,000 profit Exxon receives$50,000 profitShell receives$50,000 profit a. Select the Nash equilibrium, or equilibria, that occur if Exxon and Shell make these decisions simultaneously. Exxon builds northbound and Shell builds northbound. Exxon builds southbound and Shell builds northbound. Exxon builds southbound and Shell builds southbound.…
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?
Suppose that GE is trying to prevent Maytag from entering the market for high efficiency clothes dryers. Even though high efficiency dryers are more costly to produce, they are also more profitable as they command sufficiently higher prices from consumers. The following payoffs table shows the annual profits for GE and Maytag for the advertising spending and entry decisions that they are facing. GE MAYTAG Advertising = $12m Advertising = $0.7m Stay Out $0, $30m $0, $35m Enter $1m , $20m $12m, $15 Based on this information, can GE successfully prevent Maytag from entering this market by increasing its advertising levels? What is the equilibrium outcome in this game? Suppose that an analyst at GE is convinced that just a little bit more advertising by GE, say another $2m, would be sufficient to deter enough customers from buying Maytag, thus, yield less than $0 profits for Maytag in the event it enters. Suppose that spending an extra $2m on advertising…
Question 3 options: Now consider the same industry but assume that two firms with the same cost function c ( q i ) = 2 ∗ q i f o r i ∈ { 1 , 2 } are active in this market. What is the price that realizes when they set prices in a simultanous move game (ie they play Bertrand). Assume now that the cost of the second firm is instead c ( q 2 ) = 5 ∗ q 2 What is the equilibrium price if they again play Bertrand? (round to the nearest whole number)
Dan Murphy's (DM) and BWS are the only two liquor chains in Australia that hold the rights to sell a popular new beer named Victoria Sweeter (VS). Both Dan Murphy's and BWS are contemplating between charging a high price ($60 per case) or a low price ($40 per case). The payoff matrix below shows all possible scenarios and outcomes for the two firms. BWS Charge $60 per case Charge $40 per case Dan Murphy's (DM) Charge $60 per case DM: $30,000 profitBWS: $25,000 profit DM: $13,000 profitBWS: $38,000 profit Charge $40 per case DM: $45,000 profitBWS: $12,000 profit DM: $19,000 profitBWS: $20,000 profit * Profits reported in the above table are monthly figures on the Victoria Sweeter (VS) beer only. Required: (a) Identify the dominant strategy for Dan Murphy's in this game. Show a detailed analysis to prove why it is the dominant strategy (b) Identify the non-cooperative* Nash equilibrium for this game. (* Non-cooperative means that each firm makes their…
2 clothing manufacturers, LE and LL B, are deciding what price to charge for very similar field coats. Cost of producing these coats is $100. The coats are very close substitutes, so customers swarm to the seller that offers the lowest price. If both firms offer the same prices, each receives half of the customers. Assume the two firms have the choice of pricing at prices of $103, $102, or $101. The profit each firm would earn at various prices is shown in the payoff matrix below $103 ($150, $150) ($0, $200) ($0, $120) Lands' End $102 ($200, $0) ($100, $100) ($0, $120) $101. ($120, $0) ($120, $0) ($50, $50) What is the Nash equilibrium and expected profits to LLB and LE of this game? If this was a mixed strategy game in which LLB has a 25% percent chance of choosing a price of $101, a 25% chance of choosing price of $102, and a 50% chance of choosing $103, while LE has a1/3 chance of…
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 :))
Suppose Toyota and Honda must decide whether to make a new kind of side-impact airbags standard equipment on all models. Side impact-airbags raise the price of each automobile by $1000. If both firms make side-impact airbags standard equipment, each company will earn profits of $2.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1 billion (due to lost sales to other automakers). If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $3 billion and the other company will lose $1.5 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment?
Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1,000. If both firms make side-impact airbags standard equipment, each company will earn profits of $0.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1.5 billion. If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $2 billion and the other company will earn $-1 billion.If you were a decision maker at Honda, would you make side-impact airbags standard equipment?multiple choice 1 There is not enough information to answer the question. No Yes If Toyota and Honda were able to cooperate, would you expect this same outcome?multiple choice 2 Yes No There is not enough information to answer the question.