Question

Buying any type of product or good is a sequential game in which the owner of the product or good sets the price and then the buyer can buy, not buy, or counter and offer a new price.  This can be broken down into the following simple tree diagram:

However, the determination of what Price A and Price B is is often a simultaneous game played between two or more competing companies. For example:  

Taking this into consideration, imagine you are in charge of ticket sales for Drew University.  You have complete autonym in setting ticket prices.  You are charged with selling tickets to four different groups: (1) High Rollers; (2) Semi-Big Shots; (3) Average People; and (4) Cheapos.  You have one other smaller university 60 miles from you (i.e., Muller Institute for Technology) that you are competing with for fans.  Based on all this information, please answer the following questions:

1. What type of market structure is Drew U. competing in and why do you believe this?

2. Describe the strategies would you take in the simultaneous game you are playing against Muller Institute for Technology to set prices and assure the highest possible profit for Drew U. Why would you take these strategies?

3. Based off your simultaneous game discussion in the above question, create a tree diagram to show how your pricing strategy would be presented to the consumers.

a. The tree diagram should begin with Drew U. and have four branches (one for each of the groups you can sell tickets to).  Each branch should indicate a price point you would charge.   

b. Why did you set the 4 price points you did?

c. What strategies can you use in this sequential game to assure you make the most money possible for

Answer 1

Answer:

Background:

Buying any type of product or good is a sequential game in which the owner of the product or good sets the price and then the buyer can buy, not buy, or counter and offer a new price. However, the determination of what Price A and Price B is often a simultaneous game played between two or more competing companies.

For example:  

I am an in charge of ticket sales for Drew University.

I have complete autonym in setting ticket prices.

I am charged with selling tickets to four different groups:

1. High Rollers; (2) Semi-Big Shots; (3) Average People; and (4) Cheapos.

We have one other smaller university 60 miles from us (i.e., Muller Institute for Technology) that we are competing with for fans.

   

Type of market structure is Drew University competing in and why we believe this:

• Drew University is in the alone place, where no other universities are available in the near of its campus city.
• Drew University has only one university which is 60 miles away from their place and its name is Muller Institute of Technology.
• Drew University is competiting with the Muller Institute of technology.
• I am ticket in-charge for ticket sales for the Drew University and would like to have four category options for the tickets sale.   

Duopoly Market Structure for the Drew University: Based on the above information, the Drew University is in the Duopoly market structure.

Reason for Duopoly Market Structure: The Drew university is in the alone place and do not have any competitor in the same region/city. However there is another institute named as Muller Institute of Technology, which is 60 miles away from this university and the Drew University has competition due to this Muller institute of technology. Thus Muller and Drew both are in competition with each other. Thus the sales of both are affected from one another’s proposals to the students.

So since there are two players in the region, the competition among them is dual competition and the market structure which has dual competition is known as the Duology Market Structure.

We believe that this is the duology market structure because, there are two players in the region and both are affected due to each other. Thus the sale tickets of Drew University will be affected by the sale ticket proposal of Muller institute of technology. Drew University do not have monopoly market structure because they are having competition due to the presence of the Muller Institute of technology, though it is 60 miles away from them, but still they are having competition among them and their sales are affected because of each other.