Chapter 14 Pay-off Matrix Exercise in Oligopoly.

Added on - 16 Sep 2019

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Chapter 14 Pay-off Matrix Exercise in OligopolyUse the payoff matrix below. In this game, there are two airlines, Sky World andBay City Airlines, and they have the choice of pricing high or low. Each company’sprofit depends on how the other company responds to its pricing strategy.If both firms collude and agree on a high price, how much will each in profit?If one prices low and the other prices high, what will the low-price firm earn andwhat will the high price firm earn?Given the risk of retaliation, what will be the likely outcome and how much willeach firm earn?What is the dominant strategy in this game?Pay-OffMatrixSky WorldHigh LowHighBayCityLow+30+30+50+4+4+50+10+10
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