Two computer retailers, Best Buy and Circuit City, are considering entering a small town. Best Buy is the larger and more profitable of the two rivals. Each firm can either enter the market or not. The table shows the payoff matrix. Profits in each cell of the payoff matrix are given as (Best Buy's profits, Circuit City's profits). Are there any dominant strategies in the game? If this game is played only once, and each firm decides whether to enter the market independently, what is the Nash equilibrium of this game? Explain your answers.

Question

Two computer retailers, Best Buy and Circuit City, are considering entering a small town. Best Buy is the larger and more profitable of the two rivals. Each firm can either enter the market or not. The table shows the payoff matrix. Profits in each cell of the payoff matrix are given as (Best Buy's profits, Circuit City's profits). Are there any dominant strategies in the game? If this game is played only once, and each firm decides whether to enter the market independently, what is the Nash equilibrium of this game? Explain your answers.
​
​

Quizplus · Accepted Answer

The Answer of Two computer retailers, Best Buy and Circuit City, are considering entering a small town. Best Buy is the larger and more profitable of the two rivals. Each firm can either enter the market or not. The table shows the payoff matrix. Profits in each cell of the payoff matrix are given as (Best Buy's profits, Circuit City's profits). Are there any dominant strategies in the game? If this game is played only once, and each firm decides whether to enter the market independently, what is the Nash equilibrium of this game? Explain your answers.
​
​

Two Computer Retailers, Best Buy and Circuit City, Are Considering