1. Game : Price decrease: More Favorable Condition
Apple
No change in price
No change in
Price
Microsof
Price
Decrease
a. Price: Decrease (.71, 1.6) (-.4, 1.9) (1.3, .2) (.39, .8) Identify each firm’s dominant strategy. Identify the Nash
equilibrium.
equilibrium.
b. There is a better solution for both companies if they fix the
price (co-operative- not independent). Identify that better solution.
price (co-operative- not independent). Identify that better solution.
2. Explain the three scenarios (profit-loss-shut down)
associated with the ATC, AVC benchmarks and the
MR=MC criteria in a purely competitive market
associated with the ATC, AVC benchmarks and the
MR=MC criteria in a purely competitive market
3. Why is the Game theory a good model to simulate
the oligopoly market? What are the advantages of
this game theory approach to understand Oligopoly.
the oligopoly market? What are the advantages of
this game theory approach to understand Oligopoly.
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