Question: Competitive Analysis Question 2. Amazon Web Services and Microsoft Azure. The following normal form game depicts the pricing rivalry between Amazon Web Services and Microsoft

Competitive Analysis Question

2. Amazon Web Services and Microsoft Azure. The following normal form game depicts the pricing rivalry between Amazon Web Services and Microsoft Azure for their cloud storage. Amazon Web Services considers five possible price levels: $299, $289, $279, $269 and $259, while Microsoft Azure considers four possible price levels: $289, $279, $269 and $259. Monthly profits in million dollars are: Microsoft Azure 289 279 269 259 299 35 30 25 20 100 95 85 60 289 30 35 50 115 40 110 105 75 Amazon Web Services 279 40 45 35 105 50 115 90 85 269 20 25 30 35 95 90 75 80 259 15 20 10 5 90 85 55 45 (a) Find each firm's best response to each possible strategy of the other. (b) What is (are) the Nash equilibrium (equilibria) of the game? (c) What combination of strategies generates the highest total profit? outcome? Why might the two firms not be able to come to an agreement on this

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