Table 14-4 Alistair Luggage and Baine Baggage Are the Only Firms Selling

Table 14-4

Alistair Luggage and Baine Baggage are the only firms selling luggage in the upscale town of Montecito.Each firm must decide on whether to increase its advertising budget to compete for customers.If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit.Table 14-4 shows the payoff matrix for this advertising game.
-Refer to Table 14-4.If Alistair assumes that Baine would increase its advertising budget, what should it do?

A) Alistair should keep its own budget the same and allow Baine to incur the higher cost.
B) Alistair should also increase its advertising budget.
C) Alistair should not change its advertising budget.
D) Being a duopolist, Alistair is not affected by Baine's choices because it has a secure 50 percent market share.