Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 13, Problem 19PAA
To determine

To know:Whether offer to be accepted or not.

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After graduation from business school, Pete wanted to start a new business.  In competition with another firm, he became involved in developing a new technology that would allow consumers to sample food over the Internet. Given the newness of this market, technological compatibility across firms is important. Pete’s firm, DigiOdor, is far advanced in developing its Sniff technology. His competitor, WebTaste, has been working on an incompatible technology, Smell. If they both adopt the same technology, Sniff or Smell, they each may gross $150 million from the developing industry. If they adopt different technologies, consumers will later decide to purchase neither product, leading to gross sales of $0 each. In addition to the above considerations, switching over to the other technology would cost WebTaste $100 million right away and DigiOdor $250 million. In other words, WebTaste would incur additional costs of $100 million if it switched to Sniff technology, and DigiOdor would incur…
Dennis is the International Representative of ABS-CBN and he is planning to partner with a foreign TV network, either BBC or Al-Jazeera. He also learned that ABS- CBN’s closest competitor, GMA 7, is planning to partner with a foreign TV network either CNN or Fox News. If ABS-CBN partners with BBC, it will lose $7,000 if GMA partners with CNN or gain $9000 if GMA 7 partners with Fox News. If ABS-CBN partners with Al-Jazeera, it will gain $2,000 if GMA 7 partners with CNN or lose $4,000 if GMA 7 partners with Fox News. What should be Dennis’ strategy? How much gain or loss for ABS-CBN will he expect? What should be the strategy of GMA 7?
Two firms, Firm 1 and Firm 2 are considering simultaneously developing a new product for a market. The costs of developing the product are $5m and there will be a total revenue in the market of only $60m if only one of the firms develops the product. If both firms do not develop the product then there will be a total of $90m available in revenue from the market and Firm 1 will receive 60% of the market share and Firm 2 will receive 40% of the market share. a) Capture this entry game in a payoff matrix b) What is the Nash equilibrium c) Does either firm have a dominant strategy?    plz answer me as soon as possible
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