Radio frequency identification (RFID) tracking tags may ultimately replace bar codes. With this system, a radio signal automatically records the arrival of a product in a warehouse, its shipment to a store, and its purchase by the consumer. Suppose that Wal-Mart and Target are independently deciding whether to stick with bar codes or switch to RFID tags to monitor the flow of products. Because many suppliers sell to both Wal-Mart and Target, it is much less costly for suppliers to use one system or the other rather than to use both. The following payoff matrix shows the profit per year for each company resulting from the interaction of their strategies.
a. Briefly explain whether Wal-Mart has a dominant strategy.
b. Briefly explain whether Target has a dominant strategy.
c. Briefly explain whether there is a Nash equilibrium in this game.
