# Two competitors in Game Theory Model

Answers the question: Suppose two competitors, Coa, Inc., and Han, Inc., are locked in a bitter pricing struggle in the aluminum industry. In the limit pricing payoff matrix, Coa can choose a given row of outcomes by offering a limit price ("up") or monopoly price ("down"). Han can choose a given column of outcomes by choosing to offer a limit price ("left") or monopoly price ("right"). Neither firm can choose which cell of the payoff matrix to obtain; the payoff for each firm depends upon the pricing strategies of both firms. It includes a 2 by 2 matrix of a game theory model.

Â© BrainMass Inc. brainmass.com December 24, 2021, 8:08 pm ad1c9bdddfhttps://brainmass.com/economics/game-theory/two-competitors-in-game-theory-model-251078

#### Solution Preview

A.Is there a dominant strategy equilibrium in this problem? If so, what is it?

Yes.

If Coa chose LP, Han would choose LP.

If Coa ...

#### Solution Summary

Answers the question: Suppose two competitors, Coa, Inc., and Han, Inc., are locked in a bitter pricing struggle in the aluminum industry. In the limit pricing payoff matrix, Coa can choose a given row of outcomes by offering a limit price ("up") or monopoly price ("down"). Han can choose a given column of outcomes by choosing to offer a limit price ("left") or monopoly price ("right"). Neither firm can choose which cell of the payoff matrix to obtain; the payoff for each firm depends upon the pricing strategies of both firms. It includes a 2 by 2 matrix of a game theory model.