-Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the dominant strategy for Greenco?
A) high price
B) low price
C) There is no best strategy.
D) Not enough information is given to determine the best strategy.

Question

-Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the dominant strategy for Greenco?
A) high price 
B) low price 
C) There is no best strategy. 
D) Not enough information is given to determine the best strategy.

Quizplus · Accepted Answer

A dominant strategy is one that provides the highest payoff to a player no matter what the other player does. For Greenco, choosing a low price gives it a payoff of 3 (if Ajax chooses a high price) or 2 (if Ajax also chooses a low price), both of which are higher than the payoffs from choosing a high price (1 if Ajax chooses high, 0 if Ajax chooses low). Therefore, the dominant strategy for Greenco is to choose a low price.

-Refer to the Above Figure