Chapter 13, Problem 8DQ

No more than 100 words for the answer: Explain the game theoretic approach to bargaining theory, focusing on the concepts of cooperative versus noncooperative solutions, threat values, and the cooperative surplus.

In the Nash equilibrium of a Cournot game with two firms who have identical marginal costs, each firm chooses to produce half of the quantity that would be produced by a monopolist, given the same aggregate demand and marginal cost.(a) True. (b) False.

Comparison of the Four Structures: Compare the four industry structures based on quantity, price, profits, and price.  (See Comparing Oligopoly Models.)     Game Theory: The Prisoners’ Dilemma: Assume that the Wilson and Spalding athletic equipment companies are in a one-shot game for market share and profits, but that they have the option of choosing only one of two possible price strategies for basketballs: $20 or $80. Obviously if they choose different strategies, the firm with the lower price will win the entire market.  The firms face the following payoff matrix (See Chap. 10).              Wilson\ \Spalding Wilson $ 20 Price Wilson $ 80 Price Spalding $ 20 Price   $ 400,  $ 400     $ 1500,  $ 0   Spalding $ 80 Price   $ 0,  $ 1500     $ 1000, $ 1000               What strategy will each firm choose?  Why?  Which strategy is dominant?  Which strategy is preferred by each firm?  What will be the outcome of the one-shot game?  Where is the Nash…

An oligopoly is a market structure in which a. one firm has 100 percent of a market. b. there are many small firms. c. there are many firms with no control over price. d. there are few firms selling either a homogeneous or differentiated product.

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…