[chrydenmom]

Suppose two competitors, Coa, Inc. and Han, Inc. are locked in a bitter pricing struggle in the aluminum industry. In the limit pricing payoff matrix, Coa can choose a given row of outcomes by offering a limit price ("up") or monopoly price ("down"). Han can choose a given column of outcomes by choosing to offer a limit price ("left") or monopoly price ("right"). Neither firm can choose which cell of the payoff matrix to obtain; the payoff for each firm depends upon the pricing strategies of both firms.




Han





Coa
Pricing Strategy
Limit Price
Monopoly Price

Limit Price
$1.5 billion, $3 billion
$2.5 billion, $2 billion

Monopoly Price
$1 billion, $4 billion
$1.75 billion, $3 billion



Is there dominant strategy equilibrium in this problem? If so, what is it?
Is there Nash equilibrium in this problem? If so, what is it?