Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below. If firm #1 announces it will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

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Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below.  If firm #1 announces it will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

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The Answer of Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below.  If firm #1 announces it will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

Two Firms in a Local Market Compete in the Manufacture