The following matrix shows strategies and payoffs for two firms
that must decide how to price their products.
Firm 1
_____________________________________________________________________________________
Price
High
Price
Low
Firm
2
Price
High
200.
200
50,
300
Price
Low
300,
50
120, 120
Is there a dominant strategy? If so, what is it?
Is there a Nash equilibrium? If so, what is it?
Is this a Prisoner’s Dilemma Game? Why?
Suppose MC = $10. Given each of the following price
elasticities compute...