There are two firms that compete against each other and each needs to decide if it will undertake research and development to improve its product. The payoffs are as follows:
If Firm 1 does undertake R&D then Firm 2 will earn $25 million if they also do R&D or $50 million if not;
If Firm 1 does not undertake R&D then Firm 2 will earn $2 million if they do R&D or $0 million if not;
If Firm 2 does undertake R&D then Firm 1 will earn $10 million if they also do R&D or $20 million if not;
If Firm 2 does not undertake R&D then Firm 1 will earn $2 million if they do R&D or $0 million if not;
Regarding this game, which of the following is true?
A) Both firms will not do R&D.
B) Only one firm will do R&D but we cannot say which one.
C) Both firms will do R&D.
D) Firm 1 will do R&D and Firm 2 will not.
Correct Answer:
Verified
Q81: In a duopoly game we observe the
Q82: A duopoly is a form of
A) monopoly.
B)
