Based on Judo Economics devise a game tree and answer the following questions: 1. Base Case Suppose
Question:
Based on "Judo Economics" devise a game tree and answer the following questions:
1. Base Case Suppose that: (a) each buyer has a willingness-to-pay of $200 for one unit of either the incumbent's or the entrant's product; and (b) both incumbent and entrant have a $100 unit cost of serving buyers. Formulate a strategy for the entrant, i.e., whether it should enter the market, and if so, how many buyers to target and what price to charge for its product? How much money can the entrant make?
2. Disadvantaged Entrant Now supposes that: (a) each buyer has a willingness-to-pay of $200 for one unit of the incumbent's product and $160 for one unit of the entrant's product; and (b) the incumbent has a $100 unit cost and the entrant a $120 unit cost. Formulate a new strategy for the entrant. How much money can the entrant now make?
3. Advantaged Entrant Finally, suppose that: (a) each buyer has a willingness-to-pay of $200 for one unit of either the incumbent or the entrant's product; and (b) the incumbent has a $120 unit cost and the entrant an $80 unit cost. Formulate a new strategy for the entrant. How much money can the entrant make this time?
Modern Systems Analysis And Design
ISBN: 9780134204925
8th Edition
Authors: Joseph Valacich, Joey George