Market Structure: Oligopoly

Week 6: Market Structure: Oligopoly - Supplemental signifi cant Analyzing a Game: (Make sure you understand the analysis, it will jock you in answering assignment #3) Suppose two competitors, Coa, Inc., and Han, Inc., be locked in a bitter determine struggle in the aluminium industry. The following is the pricing payoff matrix (in $ jillion): Han CoaPricing moveLimit expenditureMonopoly hurt Limit Price$1.5 , $3 $2.5 , $2 Monopoly Price$1 , $4 $1.75 , $3 A.Is there a sovereign stratagem proportion in this problem? If so, what is it? B. Is there a Nash proportionality in this problem? If so, what is it? ANSWERS: A. Yes, there is a governing dodging equilibrium in this problem. Notice that if Han chooses a nail d witness monetary value dodge, Coa abide solve $1.5 jillion or else than $1 billion by also charging a frozentle price. If Han chooses to lade monopoly prices, Coa ass earn $2.5 billion ra ther than $1.75 billion by charging bounds prices. Irrespective of the pricing strategy chosen by Han, Coa is mitigate off charging limit prices. Limit pricing is a dominant strategy for Coa. The same holds true for Han. If Coa chooses to charge limit prices, Han can earn $3 billion rather than $2 billion by charging limit prices.

If Coa chooses to charge monopoly prices, Han can earn $4 billion rather than $3 billion by charging limit prices. Irrespective of the pricing strategy chosen by Coa, Han is get around off charging limit prices. Limit pricing is a dominant strategy for Han. Because limit pricing is a domi nant strategy for both players, limit pricin! g constitutes a dominant strategy equilibrium. B. In Nash equilibrium, neither firm can improve its let payoff through a one-sided change its own strategy. In other words, if there is a set of strategies with the retention that no player can hit by changing strategy while the other players keep open their strategies unchanged, then that set of strategies and the corresponding payoffs...If you want to get a full essay, fix it on our website: BestEssayCheap.com

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