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Oligopoly models & game theory

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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
Prisonerâ??s Dilemma
a and b
None of the above

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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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Similar Posting

Oligopoly Model

When one automaker begins offering low cost financing or rebates, others tend to do the same. What two oligopoly models might offer an explanation of this behavior?

my answer: I think the two types of oligopoly models are the Game theory model and Kinked Demand Curve. Because we know their will always be a demand for cars, but most consumers are looking to buy cars on a budget. These models apply.

Is this a correct assumption?

Thank you for any assistance.

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