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PAYOFF MATRIX FOR A PRICING GAME FIRM B Low Price High Price FIRM A Low Price...

PAYOFF MATRIX FOR A PRICING GAME

FIRM B

Low Price

High Price

FIRM A

Low Price

(50,000; 50,000)

(80,000; 30,000)

High Price

(30,000; 80,000)

(20,000; 20,000)

From the above payoff matrix where the payoffs are the profits of the two firms, determine whether:

  1. Firm A has a dominant strategy. If so, what is it?     
  2. Firm B has a dominant strategy. If so, what is it?
  3. The optimal strategy for each firm if there is any.
  4. Will a Nash equilibrium exist under this situation?   
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