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Firm 1 -Two Software Firms Have Developed an Identical New Software Application

Question 78

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Firm 1 Firm 1 -Two software firms have developed an identical new software application. They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dollars. What is the Nash equilibrium of the game? A) Both Firm 1 and 2 will sell the software application at $30 a copy. B) Both Firm 1 and 2 will give the software application away free. C) Firm 1 will give the application away free and Firm 2 will sell it at $30. D) There is no Nash equilibrium to this game.
-Two software firms have developed an identical new software application. They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dollars. What is the Nash equilibrium of the game?


A) Both Firm 1 and 2 will sell the software application at $30 a copy.
B) Both Firm 1 and 2 will give the software application away free.
C) Firm 1 will give the application away free and Firm 2 will sell it at $30.
D) There is no Nash equilibrium to this game.

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