Problem
Consider a bottled water market in which only two firms are operating: Canyon Water and Lake Water. Assume zero cost to produce bottled water. The market demand is given by the following schedule.
|
Price
|
Quantity
|
|
0
|
30
|
|
10
|
25
|
|
16
|
20
|
|
26
|
15
|
|
34
|
10
|
|
35
|
5
|
|
36
|
0
|
(1) Construct a payoff table and find a Nash equilibrium from the table.
(2) Construct a prisoner's dilemma scenario with a block of four payoff cells from the table.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.