Consider the Following Innovation Game: Firm a Must Decide Whether

question 102

Multiple Choice

Consider the following innovation game: Firm A must decide whether or not to introduce a new product.Firm B must decide whether or not to clone firm A's product.If firm A introduces and B clones,then firm A earns $1 and B earns $10.If A introduces and B does not clone,then A earns $10 and B earns $2.If firm A does not introduce,both firms earn profits of 0.How many Nash equilibria are there for this game?

• A) 0
• B) 1
• C) 2
• D) 0, but there are secure strategies.

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Definitions:

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