Question

Given the following data and assuming the goal is to maximize profit, is there a dominant strategy for either of the firms? If so, what is it? What type of overall outcome is this? (Microsoft, Apple) Apple High Price Low Price Micro High Price (10 billion , 6 billion) (7 billion , 5 billion) Soft Low Price (8 billion , 4 billion) (4 billion , 3 billion)

Answer 1

		APPLE
		High Price	Low Price
Microsoft	High Price	10,6	7,5
Low Price	8,4	4,3

For Apple, it is always better to play a High Price game than a low price game since for any strategy of Microsoft, Apple has a better payoff by playing High Price.

Likewise for Microsoft, High Price is a dominating strategy since for any strategy of Apple, Microsoft has a better payoff by choosing high Price over Low Price.

So the dominant strategy is choosing High Price for both the players to get the maximum profit.

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