Two firms, Wayne Enterprises and Stark Industries, are deciding which city to open new branches. The...

  

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Two firms, Wayne Enterprises and Stark Industries, are deciding which city to open new branches. The three possible cities are Des Moines, Omaha, and Kansas City. The profits to be gained in each city are 50, 100, and 150, respectively. If a firm operates in a city alone, it takes all the profit. If both firms operate in the same city, they split the profit equally. Each firms choose one city to enter simultaneously. 2.a Draw up the normal form game matrix for the market entry game, showing the possible payoffs for each outcome. 2.b Write the best response functions for each firm. 2.c Find all pure strategy Nash equilibria. Two firms, Wayne Enterprises and Stark Industries, are deciding which city to open new branches. The three possible cities are Des Moines, Omaha, and Kansas City. The profits to be gained in each city are 50, 100, and 150, respectively. If a firm operates in a city alone, it takes all the profit. If both firms operate in the same city, they split the profit equally. Each firms choose one city to enter simultaneously. 2.a Draw up the normal form game matrix for the market entry game, showing the possible payoffs for each outcome. 2.b Write the best response functions for each firm. 2.c Find all pure strategy Nash equilibria.

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2a Normal Form Game Matrix Lets denote the firms as follows Wayne Enterprises WE Stark Industries SI ... View the full answer