Two companies have to choose their prices at the same time, at either high (pH) or low (pL) levels. If both choose high (pH), they will share the monopoly profits of 50 thousand euros. Otherwise, 40 thousand euros will be distributed. If Company 1 chooses high (pH) and Company 2 low (pL), then it will receive zero profits and its opponent will have profits equal to 35 thousand euros. The opposite will happen if firm 1 chooses low (pL) and the other firm high (pH). The Nash balance of the game is formed in the pair of strategies а) рH, рH b) pH, pL c) pL, pL d) pL, pH

Two companies have to choose their prices at the same time, at either high (pH) or low (pL) levels. If both choose high (pH), they will share the monopoly profits of 50 thousand euros. Otherwise, 40 thousand euros will be distributed. If Company 1 chooses high (pH) and Company 2 low (pL), then it will receive zero profits and its opponent will have profits equal to 35 thousand euros. The opposite will happen if firm 1 chooses low (pL) and the other firm high (pH). The Nash balance of the game is formed in the pair of strategies а) рH, рH b) pH, pL c) pL, pL d) pL, pH

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.6P

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