Table 16-4
In the following duopoly game, the two firms can either set the price of their product high or low. In this market, customers are very price sensitive: when one firm sets a low price it steals the majority of customers from its competitor. The game is represented in the table below.

-Refer to Table 16-4. The dominant strategy for the firms are:

Question

Table 16-4
In the following duopoly game, the two firms can either set the price of their product high or low. In this market, customers are very price sensitive: when one firm sets a low price it steals the majority of customers from its competitor. The game is represented in the table below.
 
-Refer to Table 16-4. The dominant strategy for the firms are:

Quizplus · Accepted Answer

Both firms have a dominant strategy to set a low price, as it would give them the maximum profit regardless of the other firm's strategy. Therefore, the best choice for both firms is to set a low price. Option A) is the correct answer.

Table 16-4 In the Following Duopoly Game, the Two Firms Can Either