Refer to the Above Payoff Matrix for the Profits (In

question 236

Multiple Choice

Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) and two pricing strategies (high and low) . Which of the following is the outcome of the dominant strategy without cooperation?

• A) Both firm A and firm B choose the high price.
• B) Both firm A and firm B choose the low price.
• C) Firm A chooses the low price while firm B chooses the high price.
• D) Firm A chooses the high price while firm B chooses the low price.

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Definitions:

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