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game theory in marketing

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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 strategioes of both firms.

Han

Coa Pricing Strategy Limit Price Monopoly Price
Limit Price $1.5 billion,$3billion $2.5 billion,$2 billion
Monopoly Price $1 billion,$4 billion $1.75 billion,$3 billion

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

Is there a Nash equilibrium in this problem? If so, what is it?

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Solution Summary

The solution examines game theory in marketing. The limit pricing payoff matrix is determined. Whether there is a Nash equilibrium in the problem is determined.

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