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nakungth nakungth
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7 years ago
Two firms in a local market compete in the manufacture of cyberwidgets.  Each firm must decide if it will offer a warranty or not.  The pay-offs of each firm's strategy is a function of their competitor as well.  The pay-off matrix is presented below.

 

If firm #1 announces they will offer a warranty regardless of what firm #2 does, is this a credible threat?  Why or why not?
Textbook 
Microeconomics

Microeconomics


Edition: 8th
Author:
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oracledarrenoracledarren
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7 years ago
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nakungth Author
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#2
6 years ago
Thank you!
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