Two Companies,A and B,are Considering Entry into the Same Two

question 147

Essay

Two companies,A and B,are considering entry into the same two markets: Asia or Australia.Due to financial constraints each company can only enter one of the two markets.The expected payoffs to each company for each possible entry scenario are as follows:
$\begin{array}{|l|l|c|c|}\hline \text { Company A Decision } & \text { Company B Decision } & \text { Payoff to A } & \text { Payoff to B } \\\hline \text { Enter Asia } & \text { Enter Asia } & \$ 35 \mathrm{M} & \$ 50 \mathrm{M} \\\hline \text { Enter Asia } & \text { Enter Australia } & \$ 50 \mathrm{M} & \$ 90 \mathrm{M} \\\hline \text { Enter Australia } & \text { Enter Asia } & \$ 85 \mathrm{M} & \$ 60 \mathrm{M} \\\hline \text { Enter Australia } & \text { Enter Australia } & \$ 40 \mathrm{M} & \$ 45 \mathrm{M} \\\hline\end{array}$ a)Construct a game that represents the entry decision.
b)What type of game is it?
c)Circle all Nash equilibriums for the game.
d)Company A has hired you as a consultant.What advice would you give them regarding this entry decision?

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Definitions:

Unit Costs

The cost incurred to produce, store, or purchase one unit of a product or service.

Customizing

Using warehousing to add value to a product through component modification, repair, labelling, and packaging.

Warehouse Layout

A design that attempts to minimize total cost by addressing trade-offs between space and material handling.

Warehouse Layout

The arrangement of a warehouse and its storage facilities to optimize the storage and handling of goods, efficiency, and safety.