(Answered) Nash equilibrium for a one-shot game

Economics

Problem: Suppose two shoe stores operate near campus, Greyhound Shoes and ENMU Shoe World. Each of these stores has two options for pricing strategies: a high markup and a low markup. Use the following, normal-form game to carefully discuss your answers to questions a through d.

		Greyhound Shoes
ENMU Shoe World		HIGH	LOW
HIGH	$8,000	$8,000	$12,000	$2,000
LOW	$2,000	$7,000	$6,000	$3,000

Required:

a. Carefully describe the dominant strategy for each store.

b. What is the Nash equilibrium for a one-shot game?

d. Suppose management at ENMU Shoe World approaches their counterpart at Greyhound Shoes with a suggestion to collude. How much would ENMU Shoe World be willing to pay Greyhound Shoes to change their strategy?

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Microeconomics, Economics

Category:- Microeconomics
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