Consider two rival firms Fuji and Kodak. Each firm can choose to either cut price or not cut prices. If neither cuts prices, then they each make $7 billion. If both cut prices, then they each make $4 billion. If Kodak does not cut prices but Fuji does, then Fuji gets $9 billion while Kodak gets $3 billion. If Fuji does not cut prices but Kodak does then Kodak gets $9 billion and Fuji gets $3 billion. Draw the payoff matrix of this game and explain what do you think will happen in the Nash equilibrium of this game?

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The Answer of Consider two rival firms Fuji and Kodak. Each firm can choose to either cut price or not cut prices. If neither cuts prices, then they each make $7 billion. If both cut prices, then they each make $4 billion. If Kodak does not cut prices but Fuji does, then Fuji gets $9 billion while Kodak gets $3 billion. If Fuji does not cut prices but Kodak does then Kodak gets $9 billion and Fuji gets $3 billion. Draw the payoff matrix of this game and explain what do you think will happen in the Nash equilibrium of this game?

Consider Two Rival Firms Fuji and Kodak