Asahi and Kirin are the two largest sellers of beer in Japan. These two firms compete head to head in the dry beer category in Japan. The following table shows the profit (in millions of yen) that each firm earns when it charges different prices for its beer:
a) Does Asahi have a dominant strategy? Does Kirin?
b) Both Asahi and Kirin have a dominated strategy: Find and identify it.
c) Assume that Asahi and Kirin will not play the dominated strategy you identified in part (b) (i.e., cross out the dominated strategy for each firm in the table). Having eliminated the dominated strategy, show that Asahi and Kirin now have another dominated strategy.
d) Assume that Asahi and Kirin will not play the dominated strategy you identified in part (c). Having eliminated this dominated strategy, determine whether Asahi and Kirin now have a dominant strategy. e) What is the Nash equilibrium in this game?