Two firms are planning to sell 10 or 20 units of their goods and face the following profit matrix:

a. What is the Nash equilibrium if both firms make their decisions simultaneously? What strategy does each firm use?
b. Draw the game tree if Firm 1 can decide first. What is the outcome? Why?
c. Draw the game tree if Firm 2 can decide first. What is the outcome? Why?

Transcribed Image Text:

Firm 2 10 20 30 35 10 30 50 Firm I 60 20 20 40 20