Two firms (1 and 2) make an operating profit of Peach in the market under scrutiny....

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Two firms (1 and 2) make an operating profit of Peach in the market under scrutiny. They both consider boosting their respective market share by increasing their advertisement effort. If only one firm increases its advertisement budget by E>0, then it increases its operating profit by G>E; the other firm then loses L<E in terms of operating profit. If both firms invest into additional advertising, their market shares will not be affected. a. The game has no Nash equilibrium in pure strategies, only one in mixed. b. None of the other statements is true. c. The Nash equilibria in pure strategies are Pareto-efficient. d. The game has two Nash equilibria in pure strategies and none in mixed strategies. e. In the unique Nash equilibrium, each firm earns P-E. Two firms (1 and 2) make an operating profit of Peach in the market under scrutiny. They both consider boosting their respective market share by increasing their advertisement effort. If only one firm increases its advertisement budget by E>0, then it increases its operating profit by G>E; the other firm then loses L<E in terms of operating profit. If both firms invest into additional advertising, their market shares will not be affected. a. The game has no Nash equilibrium in pure strategies, only one in mixed. b. None of the other statements is true. c. The Nash equilibria in pure strategies are Pareto-efficient. d. The game has two Nash equilibria in pure strategies and none in mixed strategies. e. In the unique Nash equilibrium, each firm earns P-E.

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