Two companies, Alphabeta and Pineapple, decide to bid on a startup's acquisition. Alphabeta can choose between offering a package worth $1 million or $3 million, and Pineapple can choose between offering a package worth $1.5 million or $2.5 million. The company will accept the higher bid. Since the company has a critical patent, the winning company will gain 1% market share from the losing side. This market share worth $2 million for both Alphabeta and Pineapply. 1. Is this game a two-person, zero-sum game? Justify your answer. 2. Write down the payoff table of this game. 3. Formulate the problem as a linear program (you can pick either company as the decision-maker). You do NOT need to solve it

Two companies, Alphabeta and Pineapple, decide to bid on a startup's acquisition. Alphabeta can choose between offering a package worth $1 million or $3 million, and Pineapple can choose between offering a package worth $1.5 million or $2.5 million. The company will accept the higher bid. Since the company has a critical patent, the winning company will gain 1% market share from the losing side. This market share worth $2 million for both Alphabeta and Pineapply. 1. Is this game a two-person, zero-sum game? Justify your answer. 2. Write down the payoff table of this game. 3. Formulate the problem as a linear program (you can pick either company as the decision-maker). You do NOT need to solve it

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter15A: Auction Design And Information Economics

Section: Chapter Questions

Problem 10E

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Company A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices The payoff matrix shows the profits of the companies in millions based on their possible actions. Company B Increase Price Maintain Price Company A Increase Price $50, $40 $35, 530 Maintain Price 555, $45 $60, $35 The government offers a $5 milon subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? The Nash equilibrium changes, and both companies will maintain their prices O The Nash equilbrium changes, and both companies will increase their prices O The Nash equilibrium remains the same, and both companies will increase their prices O Company A wit increase its price, whie Company B maintains its price. O Company A will maintain its price, while Company Bincreases ts price.
16-1. Two equal sized newspaper have an overlap in circulation of 10% (10% of the subscribers subscribe to both newspaper). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both , because they’re are unwilling to pay twice to reach the same subscribers. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach an agreement with the other newspaper so the gains to reaching agreement are only $9? Suppose the two newspaper merge. What is the likely post merger bargaining outcome?
Toyota Pregame Show First Quarter Chevrolet Pregame Show $5million $5 million $3 million $3 million First Quarter $6 million $6 million Based on these answers, Toyota has a dominant strategy to: $4 million always purchase a pregame ad, regardless of what Chevrolet does. always purchase a first quarter ad, regardless of what Chevrolet does. only purchase a pregame ad if they know Chevrolet will do the same. $4 million
q52 If you advertise and your rival advertises, you each will earn 14 million in profits. If neither of you advertises, you will each earn 20 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn 10 million and the non-advertising firm will earn 16 million. If you and your rival plan to be in business for only one year, the Nash equilibrium is a. for each firm to advertise. b. for the other firm to advertise and your firm not to advertise. c. for your firm to advertise and the other not to advertise. d. for neither firm to advertise.
There are two energy suppliers, Origin and Globird, and each has two possible actions: to introduce (I) or to not introduce (N) a new plan. Origin is the first firm to make a decision, and Globird is next. The extensive "tree" form of the game, and the payoffs of the two firms, are given below. Globird Origin (175,75) (25,100) Globird (50,200) (75,100) Find the subgame perfect Nash equilibria (SPNE) of this game.
Consider a Cournot oligopoly with three firms i = 1, 2, 3. All firms 1. The inverse demand have the same constant marginal cost c = function of the market is given by P = 9-Q, where P is the market price, and Q =E=1 9i is the aggregate output. 13 (a) Solve for the Nash equilibrium of the game including firm out- puts, market price, aggregate output, and firm profits (Hint: the NE is symmetric). (b) Now suppose these three firms play a 2-stage game. In stage 1, they produce capacities q1, q2 and 73, which are equal to the Nash equilibrium quantities of the Cournot game characterised by part (a). In stage 2, they simultaneously decide on their prices p1, p2 and p3. The marginal cost for each firm to sell up to capacity is 0. It is impossible to sell more than capacity. The residual demand for firm i is 9 - Pi – Eiti; Ij if p; > p; for all j # i D; (pi, p-i) = 9-Pi 3 if pi = Pj for all j + i . if p; < p; for all j + i 9 - Pi (Note, here we assume that the efficient/parallel rationing ap-…
Expert Q&A Done Suppose there is a small town with two high-end restaurants. Suppose additionally that a major convention is coming to town. The restaurants are deciding whether to create print advertising to distribute at the convention in.order.to advertise their restaurant. If they both advertise, the advertising will cancel and both restaurants will get the same amount of business as if they had not advertised, so the advertising expense will have been wasted, If they both choose not to advertise, they will save the cost of advertising. • If one advertises and the other does not, the advertising restaurant will pull business away from its competitor and will end up with higher revenue. The payoff matrix is below. Restaurant A Advertise Dont Advertise A's Economic Profit =-$3000 A's Economic Profit B's Economic Profit = 0 B's Economic Profit -$3000 A's Economic Profit = $3000 A's Economic Profit = $1000 B's Economic Profit -$3000 B's Economic Proft - $1000 a) Is there a dominant…
EOC 18.04 (and 18.05) Under what conditions are oligopolists likely to reach the cooperative outcome? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a if there are many businesses in the market. b if the game they play is repeated a sufficient number of times. if they discover that a Nash equilibrium is their best outcome in the long-run. d if a sufficient number of businesses can be persuaded to lower their prices.
suppose fiat recently entered into an agreement and plan of merger with case for $4.3 billion. prior to the merger, the market for four wheel drive tractors consisted of five firms. the market was highly concentrated, with herfindahl-hirschman index of 2,915. case's share of that market was 13 percent, while fiat comprised just 7 percent of the market. if approved, by how much would the post merger herfindahl-hirschman index increase
Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 3,085. Case’s share of that market was 11 percent, while Fiat comprised just 7 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?
Two firms are competing in an infinitely repeated Bertrand duopoly. The marginal cost of both is equal to 6. There are no fixed costs. The demand function for the good is q = 10 – p, where q is the total quantity demanded and p the price. (a) Find the equilibrium in the infinitely repeated game in which the two firms share the market equally. (b) Suppose that firm l's marginal cost falls to 0. The other firm's marginal cost is still 6. Is there an equilibrium in the infinitely repeated game in which the two firms share the market?
An industry has four firms, each with a market share of 25 percent. There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy. If two of the firms in the industry seek to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is Multiple Choice 2,500 and the merger would increase the index by 1000. 5,000 and the merger would increase the index by 2000. 3,000 and the merger would increase the index by 2000. 2,500 and the merger would increase the index by 1250.