ABC and XYZ are the only two firms selling gizmos in Europe. The following table
ID: 1115331 • Letter: A
Question
ABC and XYZ are the only two firms selling gizmos in Europe. The following table shows the profit (in millions of euros) that each firm earns at different prices (in euros per unit). ABC's profit is the left number in each cell; XYZ's profit is the right number. Is there a unique Nash equilibrium in this game? If so, what is it? If not, why not? Explain clearly how you arrive at your answer. XYZ Price 24 20 60,60 68, 56 70, 50 72,46 24 56, 6866, 6684, 84 88, 60 28 50,7064, 8482, 82 96, 80 32 46,72 60,88 80,96 92,92 20 28 32Explanation / Answer
there are two Nash equilibrium.
1st 60,60
When xyz chooses price as 20 ABC chooses price as 20
When ABC chooses price as 20 xyz chooses prices 20
2nd. 84,84
When xyz chooses price as 28 ABC chooses price as 24
When ABC chooses price as 24 xyz choses price as 28
In both cases both player donot deviate from their initial decesion hence 60,60 and 84,84 are two Nash Equilibrium.