# Discuss if the entrant is better off with or without the ability to withdraw.

Discuss if the entrant is better off with or without the ability to withdraw.

1.)So what is Game Theory and how do businesses uses games? Here is some help from

In the text, we consider a sequential-move game in which an entrant was considering entering an industry in competition with an incumbent firm (See Figure 15-1). Consider now that the entrant, if fought, has the possibility of withdrawing from the industry (at a loss of 1 for the entrant and a gain of 8 for the incumbent), or staying at a loss of 5 for each player). What is the equilibrium of this game? Discuss if the entrant is better off with or without the ability to withdraw.

2.) Suppose your company runs a shuttle business of a hotel to and from the local airport. The costs for different customer loads are:

1 customer: \$30

2 customers: \$32

3 customers: \$35

4 customers: \$38

5 customers: \$42

6 customers: \$48

7 customers: \$57

8 customers: \$68.

Q

TC

MC

Total Rev

Profit

1

30

10

-20

2

32

[a]

20

-12

3

35

[b]

30

-5

4

38

[c]

40

2

5

42

[d]

50

8

6

48

[e]

60

12

7

57

[f]

70

13

8

68

[g]

80

12

3.) Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle of both.

Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.

The cost to Time Warner is \$1 per customer for licensing fees.

Preferences

Showtime

History Chanel

Customer 1

9

2

Customer 2

3

8

Suppose Time Warner could sell Showtime for \$9, and History channel for \$8, while making Showtime-History bundle available for \$13. Should it use mixed bundling. i.e., sells products both separately and as a bundle?

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Discuss if the entrant is better off with or without the ability to withdraw. was first posted on August 9, 2019 at 10:58 pm.