Market Structure: Oligopoly

Week 6: Market Structure: Oligopoly - Supplemental literal Analyzing a Game: (Make sure you understand the analysis, it will dish 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 avoidanceLimit expenditureMonopoly monetary value Limit Price$1.5 , $3 $2.5 , $2 Monopoly Price$1 , $4 $1.75 , $3 A.Is there a sovereign arrangement proportion in this problem? If so, what is it? B. Is there a Nash counterbalance 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 bring $1.5 jillion alternatively than $1 billion by also charging a frozentle price. If Han chooses to pull monopoly prices, Coa ass earn $2.5 billion rather than $1.75 billion by charging carry on 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 washbowl 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. Becaus e limit pricing is a dominant strategy for b! oth players, limit pricing constitutes a dominant strategy equilibrium. B. In Nash equilibrium, neither firm can improve its let payoff through a one-party change its own strategy. In other words, if there is a set of strategies with the retention that no player can improvement by changing strategy while the other players keep 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

If you want to get a full essay, visit our page: cheap essay