2 enterprises 1 and 2 are in competition with each other by, Ask an Expert

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2 enterprises (1 and 2), are in competition with each other by choosing advertising expenditures. The payoff functions of the two enterprises, if enterprise 1 chooses to spend x and enterprise 2 chooses y to spend in market 1, are given by

u1 (x; y) = 1 + (x - y) (2 - 3x)
u2 (x; y) = 1 + (y - x) (1 - 3y)

a) What is the best response functions of enterprise 1 and enterprise 2.

b) Suggest the Nash equilibrium levels of expenditures by each enterprise?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9527856

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