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    Nash Equilibrium

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    Dominant Strategy/Nash Equilibrium

    Firm 2

    Firm 1
    Price High Price Low
    Price High 400, 350 -80, 800
    Price Low 800, -100 200,200

    a) Does either firm have a dominant strategy, and if so, what it is?
    b) What is the Nash equilibrium of this game?

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    Solution Preview

    1. Each firm does have a dominant strategy which is PRICE LOW. This is ...

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