Suppose that a two-way network initially involves two groups of users

(A and B) and a single provider (H1). Suppose that H2 and H3 enter the market with superior network technologies. This one-time, static game is depicted in the following figure.

a. What is the Nash equilibrium in this one-time game?

b. If this game is infinitely repeated, is there any interest rate for which existing users will defect to a superior technology?

c. If this game is infinitely repeated, is there any amount that H2 and H3 can pay users of H1 to switch technologies?

B H H2 H3 H (2,2) (0,0) (0,0) A Hz (0, 0) (4,4) (0,0) H3 (0,0) (0, 0) (8,8) Payoffs: (A, B)