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Nash Equilibrium: Math or chip research

Consider two firms, A and B, that produce super computers. Each can produce the next generation super computer
for math (M) or for chip research (C). However, only one can successfully produce for both markets
simultaneously. Also, if one produces one type, the other might not be able to successfully produce the same type,
because of the limited market. The following payoff matrix illustrates the problem.

Does a Nash equilibrium exist ? (Answer yes or No). If a nash equilibrium exists, give the payoffs.

**(Firm B should be across the top of the rectangle like this, with the numbers inside)
Firm B
M C
Firm A: M 2,1 2,2
C 1,1 3,2

Solution Preview

Firm B has a dominant strategy - Strategy C. Irrespective of whatever strategy Firm A takes, Firm B would always take strategy C.
Firm A does not have a dominant ...

Solution Summary

Nash equilibrium evaluation is performed.

$2.19