What will the payoff to each firm be?

own adjacent land suitable for excav Show more ) Suppose that two coal mining companies Allied and Barclay own adjacent land suitable for excavating coal mines. The profits that each firm earns depends on both the number of mines it excavates and the number of mines excavated by the other firm. The table below lists each firms individual profits: a. Is there a dominant strategy for each firm. If so what is it? Explain. If not why not? b. What will the payoff to each firm be? Is this the best solution (in terms of optimizing industry profits)? c. Would collusion work in this case? Why or why not? Payoff Matrix: Allied Computer Barclay Excavate 1 mine Excavate 2 mines Excavate 1 mine $9 mil $11 mil Excavate 2 mines $6 mil $7 mil Note: top payoff = Allied bottom = Barclay Show less

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