Asked by
Puneet Singla
on Nov 26, 2024
Verified
Zippy's and Tony's are rival pizza restaurants in a small town. (Together they form a local duopoly.) Zippy's management determines that if it increases its advertising expenditures, it will increase profits regardless of whether Tony's increases its advertising budget. Based on this information, we can conclude that
A) this is a one-time game.
B) Zippy's has a dominant strategy in this advertising game.
C) this advertising game will reach a Nash equilibrium.
D) Zippy's has first-mover advantages in this advertising game.
Duopoly
A market structure characterized by two producers or sellers dominating the market.
Dominant Strategy
In game theory, a strategy that is optimal for a player, regardless of the strategies chosen by other players in the game.
Nash Equilibrium
A concept in game theory where no player can benefit by changing strategies if other players keep their strategies unchanged.
- Examine the idea and consequences of game theory within the context of oligopoly strategies, encompassing both dominant strategies and the concept of Nash equilibrium.
- Assess the dynamics and outcomes of oligopolistic market actions, incorporating cartels, price leadership, and collusion.
Verified Answer
MS
Learning Objectives
- Examine the idea and consequences of game theory within the context of oligopoly strategies, encompassing both dominant strategies and the concept of Nash equilibrium.
- Assess the dynamics and outcomes of oligopolistic market actions, incorporating cartels, price leadership, and collusion.