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Nash equilibrium: explained

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The following payoff matrix represents the long-run payoffs for two duopolists faced with the option of buying or leasing buildings to use for production. Determine whether any dominant strategies exist and whether or not there is a Nash equilibrium. In any case, what is the logical solution and why?

Firm 1
Lease Buy
Building Building

Lease F1 = 500 F1 = 750
Firm 2 F2 = 500 F2 = 400

Buy F1 = 300 F1 = 600
F2 = 600 F2 = 200

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Solution Summary

This solution determine whether any dominant strategies exist and whether or not there is a Nash equilibrium.

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As we can see that there is no dominant strategy exists between Firm 1 and Firm ...

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