A and B Are Going to Play a Game Twice

question 30

Essay

A and B are going to play a game twice.During both repetitions,if they both select a low price or a high price,their market share stays the same.But if one selects a low price while the other selects a high price,then the one with the low price gets more money while the one with the high price loses some market share.Based on this information,what is the most likely outcome in both periods?

---

Definitions:

Transfer Pricing

The pricing of goods, services, or intangible properties transferred within divisions of a company or between subsidiaries.

Income Tax Rate

The percentage of income paid to the government as tax.

Variable Cost

Costs that change in proportion to the level of goods or services produced or sold.

Full Cost

The total expense associated with producing a product or service, including direct costs, indirect costs, and overhead.