The table below states the payoffs in profits (of millions of tenge each day) to two grocery supermarkets that are rivals in Almaty, Blue Foods and Ladymart. Each supermarket can take one of two courses: Low prices; or high prices. In each cell, the first payoff is for Blue Foods, and the second payoff is for Ladymart. (a) Assume that neither store observes the pricing by the other store, and solve the game (if it can be solved). Explain your solution step-by-step. Does this outcome maximize total profits to the two stores? (b) Now assume that each store can observe the pricing by the other store, and solve the game. Blue Food, Ladymart High prices Low prices High prices 2, 2 0, 3 Low prices 3, 0 1,1
The table below states the payoffs in profits (of millions of tenge each day) to two grocery supermarkets that are rivals in Almaty, Blue Foods and Ladymart. Each supermarket can take one of two courses: Low prices; or high prices. In each cell, the first payoff is for Blue Foods, and the second payoff is for Ladymart.
(a) Assume that neither store observes the pricing by the other store, and solve the game (if it can be solved). Explain your solution step-by-step. Does this outcome maximize total profits to the two stores?
(b) Now assume that each store can observe the pricing by the other store, and solve the game.
|
Blue Food, Ladymart |
High prices |
Low prices |
|
High prices |
2, 2 |
0, 3 |
|
Low prices |
3, 0 |
1,1 |
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