Exhibit 15-5
Kellogg's
Price High
Price Low
General Mills
Price High
GM: $50 mil
K: $60 mil
GM: $10 mil
K: $110 mil
Price Low
GM: $100 mil
K: $20 mil
GM: $25 mil
K: $30 mil
Refer to Exhibit 15-5. In the game:
Question 20 options:
if General Mills prices high, Kellogg's is better off pricing high.
if General Mills prices high, Kellogg's is better off pricing low.
if Kellogg's prices high, General Mills is better off pricing high.
the Nash equilibrium is for both firms to price high.
Exhibit 15-5
| Kellogg's | |||
| Price High | Price Low | ||
| General Mills | Price High | GM: $50 mil | GM: $10 mil |
| Price Low | GM: $100 mil | GM: $25 mil | |
Refer to Exhibit 15-5. In the game:
Question 20 options:
| if General Mills prices high, Kellogg's is better off pricing high. | |
| if General Mills prices high, Kellogg's is better off pricing low. | |
| if Kellogg's prices high, General Mills is better off pricing high. | |
| the Nash equilibrium is for both firms to price high. |
Related textbook solutions
Related questions
|
St. Petersburg Times |
||||
|
Low Price |
High Price |
|||
|
Low Price |
$120,000 |
$54,000 |
||
|
Tampa Tribune |
$100,000 |
$120,000 |
||
|
$90,000 |
$88,000 |
|||
|
High Price |
$54,000 |
$90,000 |
||
The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa's profits are shown in bold. St. Petersburg's profits are in regular type.
For questions 1 - 7, choose the correct answer to fill in the blanks. Use the suggested words in parentheses after each blank. Provide a short explanation (25-50 words) to defend each choice.
1. Tampa Tribune's dominant strategy is ____________ (low price, high price, it has no dominant strategy).
2. St. Petersburg Times' dominant strategy is ____________ (low price, high price, it has no dominant strategy).
3. Tampa Tribune's dominated strategy is ____________ (low price, high price, it has no dominant strategy).
4. St. Petersburg Times' dominated strategy is ____________ (low price, high price, it has no dominant strategy).
5. This newspaper pricing decision ________ (is, is not) a Prisoners' Dilemma.
6. Is there a Nash Equilibrium in this game? If so, which cell(s) is/are the Nash? Is/are the Nash Dominant Strategy Equilibrium?
7. Which cell(s) is/are strategically stable?
