Suppose the only place to buy a PlayStation game console is from either Target or Wal-Mart. • If both stores charge $400, each store makes 10k each. • If both stores charge $300, the each store make $7.5k. • If one store charges $400, and the other store charges $300, the store charging $300 makes $15k, while the other store only makes $5k. Suppose each store, independently, decide to establish a matching price policy. They promise buyers to match the price of the competitor. The result of this policy would be that the Nash equilibrium of the game would be for: Target charges $400 and Walmart charges $300 both companies charge $300 for the game both companies charge $400 for the game Target charges $300 and Walmart charges $400

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Suppose the only place to buy a PlayStation game console is from either Target or Wal-Mart.
• If both stores charge $400, each store makes 10k each.
• If both stores charge $300, the each store make $7.5k.
• If one store charges $400, and the other store charges $300, the store charging $300 makes $15k, while the other store
only makes $5k.
Suppose each store, independently, decide to establish a matching price policy. They promise buyers to match the price of the
competitor. The result of this policy would be that the Nash equilibrium of the game would be for:
Target charges $400 and Walmart charges $300
both companies charge $300 for the game
both companies charge $400 for the game
Target charges $300 and Walmart charges $400
Transcribed Image Text:Suppose the only place to buy a PlayStation game console is from either Target or Wal-Mart. • If both stores charge $400, each store makes 10k each. • If both stores charge $300, the each store make $7.5k. • If one store charges $400, and the other store charges $300, the store charging $300 makes $15k, while the other store only makes $5k. Suppose each store, independently, decide to establish a matching price policy. They promise buyers to match the price of the competitor. The result of this policy would be that the Nash equilibrium of the game would be for: Target charges $400 and Walmart charges $300 both companies charge $300 for the game both companies charge $400 for the game Target charges $300 and Walmart charges $400
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