-U Sequential winner takes all advertising: Exactly two firms are competing by sequentially choosing the amount...

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-U Sequential winner takes all advertising: Exactly two firms are competing by sequentially choosing the amount of money to spend on advertising in a market. First firm one chooses an amount of advertising, ai, from the set of whole numbers (nonnegative integers) from 0 to 100. That is ai can be any element from {0, 1, 2,..., 100}. Firm two observes this choice and then chooses an amount of advertising, a2, from the set of whole numbers (nonnegative integers) from 0 to 100. Each firm produces at 0 cost; each firm's only cost is the amount of money it spends on advertising. The value of the market is $80. If the amounts of advertising are different, the entire value of the market will go to the firm with the highest level of advertising. If the amounts of advertising are the same, half the value of the market will go to each firm. b. Find firm two's best response to a1 = 80. You can just provide two's best response contingent on firm one choosing a = 80. Clearly demonstrate your logic. -U Sequential winner takes all advertising: Exactly two firms are competing by sequentially choosing the amount of money to spend on advertising in a market. First firm one chooses an amount of advertising, ai, from the set of whole numbers (nonnegative integers) from 0 to 100. That is ai can be any element from {0, 1, 2,..., 100}. Firm two observes this choice and then chooses an amount of advertising, a2, from the set of whole numbers (nonnegative integers) from 0 to 100. Each firm produces at 0 cost; each firm's only cost is the amount of money it spends on advertising. The value of the market is $80. If the amounts of advertising are different, the entire value of the market will go to the firm with the highest level of advertising. If the amounts of advertising are the same, half the value of the market will go to each firm. b. Find firm two's best response to a1 = 80. You can just provide two's best response contingent on firm one choosing a = 80. Clearly demonstrate your logic.

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To find firm twos best response to a1 80 we need to consider the possible strategies and outcomes ba... View the full answer