Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each earn $700 million in economic profit.If both companies charge a low price,they each earn $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price earns $450 million in economic profit and the company charging the lower price earns $800 million in economic profit.
a.Complete the payoff matrix below for Sony and Magnavox.
b.Find the Nash equilibrium.

Question

Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each earn $700 million in economic profit.If both companies charge a low price,they each earn $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price earns $450 million in economic profit and the company charging the lower price earns $800 million in economic profit.
a.Complete the payoff matrix below for Sony and Magnavox.  
b.Find the Nash equilibrium.

Quizplus · Accepted Answer

The Answer of Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each earn $700 million in economic profit.If both companies charge a low price,they each earn $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price earns $450 million in economic profit and the company charging the lower price earns $800 million in economic profit.
a.Complete the payoff matrix below for Sony and Magnavox.  
b.Find the Nash equilibrium.

Suppose Two Companies,Sony and Magnavox,are Competing in a Duopoly