This question refers to the following game in strategic form,where each cell shows the profits accruing to Lightning Industries and Maximum Power: The Nash equilibrium of this game is:

Question

This question refers to the following game in strategic form,where each cell shows the profits accruing to Lightning Industries and Maximum Power:  The Nash equilibrium of this game is:

Quizplus · Accepted Answer

In this game, both companies have an incentive to build new capacity since their profits would increase. Thus, both companies building new capacity is the Nash equilibrium of the game. As there is no dominant strategy for either player, they both have to adopt a strategy that is optimal for them given the strategy of the other player, leading to the Nash equilibrium of both companies building new capacity.

This Question Refers to the Following Game in Strategic Form,where