-Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good.The payoff matrix above represents the daily profit available to the firms under the different coupon strategies.
a.What strategies and payoffs are represented by quadrant A?
b.What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon?
c.What quadrant represents the equilibrium that will result if the firms act independently (compete)?
d.What quadrant represents the equilibrium that will result if the firms successfully collude?

Question

Quizplus · Accepted Answer

The Answer of 
-Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good.The payoff matrix above represents the daily profit available to the firms under the different coupon strategies.
a.What strategies and payoffs are represented by quadrant A?
b.What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon?
c.What quadrant represents the equilibrium that will result if the firms act independently (compete)?
d.What quadrant represents the equilibrium that will result if the firms successfully collude?

-Two Competing Firms in a Duopoly Must Decide Whether or Not