Answer Happy

QUESTION 13 Note: No referencing is required for short answer questions. The following market is a duopoly populated only by the companies Alpha and Beta. The pay-off matrix immediately below shows the combinations of pricing strategies available to the two companies. The numbers represent millions of dollars in profit. (The negative sign indicates a loss.) Beta High price Low price 100, 200 -50, 250 High price Low price 200, 1000, 100 5 points Save Answer Alpha Assuming Alpha and Beta act in their own self-interest, explain what will be the most likely pay-off for these firms in (i) a one-shot game, and (ii) an infinitely repeated game. Make reference to the concept of Nash equilibrium in your answer.