Managerial Economics 7th Edition by Paul Keat ,Philip Young,Steve Erfle

Exercise 3

Consider another small town that is served by two grocery stores, White and Gray. Each store must decide whether it will remain open on Sunday or whether it will close on that day. Monthly payoffs for each strategy pair are as shown in the table below.

a. Which firm is the most profitable in this market
b. Does the firm you identified in part a have a dominant strategy
c. What should this firm do Explain your answer.
d. Is this an example of a prisoners' dilemma