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Oligopoly models & game theory

1.
Scenario BB:
ABC Inc.
Offer Rebate No Rebate
XYZ Corp Offer Rebate 20, 10 30, 0
No Rebate 12, 16 20, 4

Which of the following is true about the game in Scenario BB?
ABC's dominant strategy is to offer a rebate.
ABC's dominant strategy is not offer a rebate.
XYZ's dominant strategy is to offer a rebate.
XYZ's dominant strategy is not offer a rebate.
Both ABC and XYZ have offer a rebate as a dominant strategy

2. When one automaker begins offering low cost financing or rebates, others tend to do the same. What oligopoly model (s) might offer an explanation for this behavior?
Kinked demand curve
Price Leadersip
Cartel
PrisonerĂ¢??s Dilemma
a and b
None of the above

Solution Preview

1.
Scenario BB:
ABC Inc.
Offer Rebate No Rebate
XYZ Corp Offer Rebate 20, 10 30, 0
No Rebate 12, 16 20, 4
When ABC offers a rebate, XYZ's best strategy is to offer rebate with a ...

Solution Summary

Solves two MCQs on Oligopoly model, game theory

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