Suppose that the firms in an oligopolistic market engage in a price war and, as a result, all firms earn lower profits. Gametheory would describe this as what?
an irrational strategy
a prisoners' dilemma
a contestable market
Oligopolistic firms in the US try to limit competitions from their rivals. I provide a discussion on the interdependence of firms in oligopoly and how this affects firm behavior. I introduce the kinked demand curve model and discuss two ways that firms compete. One involves non-price competition through advertising and the oth
6. Consider the following two-person, zero-sum game. Identify the pure strategy. What is the value of thegame?
player A A1________8______5______7
1. Suppose you own a home remodeling company. You are currently earning short-run profits. The home remodeling industry is an increasing-cost industry. In the long run, what do you expect will happen to
a. Your firm's costs of production? Explain.
b. The price you can charge for your remodeling services? Why?
c. Profits in h
When Mcdonald's Corp. reduced the price of its Big Mac by 75 percent if customers also purchased french fries and a soft drink, The Wall Street Journal reported that the company was hoping the novel promotion would revive its U.S. sales growth. It didn't. Within two weeks, sales had fallen. Using your knowledge of gametheory, w
Use gametheory analysis to describe the competitive behavior of Coke and Pepsi making specific references to actions taken by each firm. What conclusions can you draw about this type of competitive strategy?