Problem:
In the limit pricing payoff matrix, Coa can choose a given row of outcomes by offering a limit price(up) or monopoly price (down). Han can choose a given column of outcomes by choosing to offer a limit price (left) or monopoly price (right). Neither firm can choose which cell of the payoff matrix to obtain; the payoff for each firm depends upon the pricing strategioes of both firms.
Han
Coa Pricing Strategy Limit Price Monopoly Price
Limit Price $1.5 billion,$3billion $2.5 billion,$2 billion
Monopoly Price $1 billion,$4 billion $1.75 billion,$3 billion
Is there a dominant strategy equilibrium in this problem? If so, what is it?
Is there a Nash equilibrium in this problem? If so, what is it?