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Consider a game of market niche. Two firms are considering whether to enter or stay out of a potential new market. If both enter, competition would end firm 1 with a 60 million loss and firm 2 with a 50 million loss; If firm 1 enters while firm 2 two stay out, firm 1 shall earn a profit of 150 million; If firm 2 enters while firm 1 stays out, firm 2 shall earn a profit of 100 million firm. Any firm that stays out earns a payoff of zero. Draw the normal form of the game, then find the pure strategy and mixed strategy Nash Equilibrium.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938748

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