Two firms, Firm 1 and Firm 2 are considering simultaneously developing a new product for a market. The costs of developing the product are $5m and there will be a total revenue in the market of only $60m if only one of the firms develops the product. If both firms do not develop the product then there will be a total of $90m available in revenue from the market and Firm 1 will receive 60% of the market share and Firm 2 will receive 40% of the market share. a) Capture this entry game in a payoff matrix b) What is the Nash equilibrium c) Does either firm have a dominant strategy? plz answer me as soon as possible
Two firms, Firm 1 and Firm 2 are considering simultaneously developing a new product for a market. The costs of developing the product are $5m and there will be a total revenue in the market of only $60m if only one of the firms develops the product. If both firms do not develop the product then there will be a total of $90m available in revenue from the market and Firm 1 will receive 60% of the market share and Firm 2 will receive 40% of the market share. a) Capture this entry game in a payoff matrix b) What is the Nash equilibrium c) Does either firm have a dominant strategy? plz answer me as soon as possible
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two firms, Firm 1 and Firm 2 are considering simultaneously developing a new product for a market. The costs of developing the product are $5m and there will be a total revenue in the market of only $60m if only one of the firms develops the product. If both firms do not develop the product then there will be a total of $90m available in revenue from the market and Firm 1 will receive 60% of the market share and Firm 2 will receive 40% of the market share.
a) Capture this entry game in a payoff matrix
b) What is the Nash equilibrium
c) Does either firm have a dominant strategy?
plz answer me as soon as possible
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