Two firms operating in the market. If Firm-2 has research and development advantages which give it the
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Two firms operating in the market. If Firm-2 has research and development advantages which give it the option of introducing new product first in that case firm-2 will earn $10 million as the only supplier and firm-1 will lose $5 million . If both firms not introduce the new product they get $2 million ,if both introduce new product at the same time they will lose $7 million and finally, if Firm-1 has research and development advantages which give it the option of introducing new product first in that case firm-1 will earn $10 million as the only supplier and firm-2 will lose $5 million.
a. Design Payoff Matrix and write it in braces
b. Write Nash Equilibrium
c. Write pareto optimal outcome.
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