What is the difference between the equilibrium in dominant strategies and Nash equilibrium? Show one game example in tabular (simple) form and the other in decision tree (extended) form to support your answer.

What is the difference between the equilibrium in dominant strategies and Nash equilibrium? Show one game example in tabular (simple) form and the other in decision tree (extended) form to support your answer.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

This is a Microeconomics problem. I need help for part (d). Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.
Cournot competition: P=200-Q (hint: Q is industry output), both firms have constant MC=5. What are the Nash Equilibrium price and quantity for both firms? Please show all steps
QUESTION 3 Consider the following three versions of price competition: Cournot competition, Bertrand competition, and joint profit maximisation through collusion, and let the model and equilibrium be symmetric. Rank the toughness of price competition from the highest to the lowest, which of the following is the correct ranking? A. Cournot, Bertrand, collusion. B. Collusion, Bertrand, Cournot. C. Cournot, collusion, Bertrand. D. Bertrand, Cournot, collusion.
Economists make use of the tools of Game Theory because: It helps to analyse interactions between humans It makes them better in playing card games It offers a better understanding of oligopolies It is highly mathematical a. All of the above are true b. (1) and (2) are true c. (1) and (3) are true d. (3) and (4) are true
This is a Microeconomics problem. Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.
This exercise related to a game theory P 14 13 12 11 10 9 8 7 6 5 QD 50 100 150 200 250 300 350 400 450 500 Consider a market with the above demand and two firms. Both firms have a constant marginal cost of 7. 1. What price should these firms charge to maximize total industry profit? (Note: the marginal condition we learned will work here but you need to be careful because the changes in quantity on the schedule are not 1. Because of this, you might want to use a brute force approach here. It's worth thinking about how you would reconcile it with the marginal condition though. Also, the marginal condition doesn't match exactly so take the best number from the schedule.)......... 2. Assuming that if they set the same price, they split the market evenly, what will the profit of each firm be if they both set the above…
Bertrand duopolists face MWTP = 6 - Q and can produce any quantity without marginal and fixed cost. If the two firms compete for only 1 period, what is a Nash equilibrium price? (Assume prices must be in whole cents. Remember, do not enter the $ sign.)
Game theory TITAN is the dominant steel producer in the US, but its global competitor GIANTS has gained some sizeable market share in the US recently by expanding into US via acquisitions. TITAN currently has a 40,000-ton capacity plant and GIANTS has two plants - a 16,000-ton plant and a 4,000-ton plant. Suppose these are the only two producers of steel in the US. The current market price is $5M per 1000 tons, and variable costs are $2M per 1000 tons. Assume fixed costs are negligible relative to variable costs, and the quality of steel produced across plants is identical. At current market price there is significant overcapacity, so each firm only produces 50% of its total capacity, i.e. the production level for TITAN is 20,000 tons and that for GIANTS is 10,000 tons respectively. Marketing research had indicated that lowering the price to $4M per 1000 tons while the other firm maintained its price at $5M would shift half of the other firm’s demand to the firm with the lower price.…
(Cournot competition with different marginal costs) Our best estimate for total marketdemand in a given market is P 1000-2Q. Two firms (1 and 2) are competing in this market in quantities, choosing Q1 and Q2 simultaneously. Firm 1 has marginalcost equal to c1 = 100 and Firm 2 produces at marginal cost c2 = 200. (a) Write down the profits of both firms and and their best response functions. (b) Find the Cournot - Nash equilibrium in quantities, and calculate equilibrium profits for both firms. (c) Suppose that each firm has the option, at a previous stage, to invest in an R&D project that will reduce its marginal cost of production by 50% if successful. What is the value of this innovation to each firm? Given that R&D costs and successprobabilities are equal, which one has greater incentives to invest in R&D ? You can think in terms of per - period profits to set aside timing issues.
This assignment is designed to develop skills in collecting and assessing market information and presenting clear written communication about how market structure affects the conduct and performance of firms in an industry. Select one of the three oligopoly markets in Singapore: Telecommunications Supermarkets Ride-Hailing apps Your assignment should address the following questions: 1. 2. 3. How does the market structure (number of firms that compete in a market & relative size of the firms) affect the conduct or behaviour of firms in your chosen industry (price markups & amount spent on advertising) and their performance (profits)? Using one or more Oligopoly models (Sweezy, Cournot, Stackelberg, Bertrand), analyse how firms in your chosen industry make and respond to their competitors' output and pricing decisions. What are the pricing strategies (2nd degree, 3rd degree, Versioning, Bundling, Tying) that firms in your chosen industry implement, and discuss how…
Industrial Organziation game - Business Strategy & Game theory Consider a game with competitive for market-share in a large region (a country or city). Firm 1 initially makes a decision to either compete in the Eastern (E) or Western (W) part of a region, or to opt out entirely (O). Once this decision has been made, Firm 1 and Firm 2 (who is already present in the region) simultaneously make a decision to be aggressive (A) or passive (P) in the region. Denote actions in the Eastern region without a prime (i.e. A and P) and those in the Western region with a prime (i.e. A` and P`). We'll make the following assumptions about these firms - If Firm 1 opts out, its payoff is 8 and the payoff for Firm 2 is 12 If Firm 1 ENTERS the Eastern region both firms receive 9 if both are AGGRESSIVE both firms receive 6 if both are PASSIVE if one plays AGGRESSIVE and the other plays PASSIVE, the aggresive firm gets 5 and the passive firm gets 2 If Firm 1 ENTERS the Western region…
Questions: A) How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits? Please provide me with the correct answer, complete with a detailed explanation and calculations; otherwise, I will give multiple downvotes.Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.