Suppose the only place to buy a PlayStation game console is from either Target or Wal-Mart. • If both stores charge $400, each store makes 10k each. • If both stores charge $300, the each store make $7.5k. • If one store charges $400, and the other store charges $300, the store charging $300 makes $15k, while the other store only makes $5k. Suppose each store, independently, decide to establish a matching price policy. They promise buyers to match the price of the competitor. The result of this policy would be that the Nash equilibrium of the game would be for: Target charges $400 and Walmart charges $300 both companies charge $300 for the game both companies charge $400 for the game Target charges $300 and Walmart charges $400

Suppose the only place to buy a PlayStation game console is from either Target or Wal-Mart. • If both stores charge $400, each store makes 10k each. • If both stores charge $300, the each store make $7.5k. • If one store charges $400, and the other store charges $300, the store charging $300 makes $15k, while the other store only makes $5k. Suppose each store, independently, decide to establish a matching price policy. They promise buyers to match the price of the competitor. The result of this policy would be that the Nash equilibrium of the game would be for: Target charges $400 and Walmart charges $300 both companies charge $300 for the game both companies charge $400 for the game Target charges $300 and Walmart charges $400

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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