Problem-
Consider the following pay-off matrix (Numbers in the matrix reflect their respective profit levels) for two gas stations.
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Gas station A
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Gas Station B
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High price
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Low price
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High price
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200,000 AED; 200, 000 AED
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50,000 AED; 400,000 AED;
|
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Low price
|
400,000 AED; 50,000 AED
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80,000 AED; 80,000 AED;
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If each firm follows their dominant strategy, then what will be their respective profit levels? And if they collude then what is their new profit level?
Additional Information-
The problem belongs to Economics, mainly to Micro-economics and it is discuss about a pay-off matrix for two gas stations with dominant strategy and calculate profit levels.