Let's assume that the average Joe's gym enters the market as a competitor providing personal training sessions. In the f

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Let S Assume That The Average Joe S Gym Enters The Market As A Competitor Providing Personal Training Sessions In The F 1 (41.86 KiB) Viewed 42 times

Let's assume that the average Joe's gym enters the market as a competitor providing personal training sessions. In the first year of operations, Globogym and Average Joe's made their decisions about pricing simultaneously. Each firm chooses either pricing high or pricing low, and their interaction is represented in the game table below. The payoff to Globogym is represented in the table by ft, and the payoff to Neotel is represented by Te). Price High Average Joe's Price High Price Low 17) = 160 T = 300 T = 240 T = 0 79) = 40 T = 300 T = 160 Globogym Price Low 7) = 0 3.3 Do either of the two telecommunications firms have a dominant strategy in this interaction? If so, what are these dominant strategies? [2] 3.4 What is the Nash Equilibrium of the game above? Clearly, show the logic you use to reach your conclusion. What type of game is this? [4] 3.5 Suppose the two firms could incentivize or punish each other, could the two firms find their way to the socially optimum outcome? How would they do this? [4]