SectionWS17 - Econ 100A Worksheet#17 Game Theory II Dynamic...

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Econ 100A - Worksheet #17 Game Theory II - Dynamic Oligopoly Exercise 1 Consider again the two TV networks of WS16, and assume that one of them, channel 1, is a privately-owned network, and the second, channel 2, is a state-owned network. The state-owned network is committed to promote diversity in the kinds of programs that are aired in general, i.e. air a movie if channel 1 airs football and air football if channel 1 airs a movie. The government is considering privatizing this network and is interviewing candidates that are willing to buy it. One the candidates claims that he will respect the previous commitment to diversity. 1) Assuming that channel 1 must always announce its programs first, and then channel 2 can decide, is this claim credible? Why? 2) The government agrees to sell channel 2 to this candidate, but introduce a clause in the contract according to which if the candidate does not fulfill his promise, he will have to pay a fine corresponding to f % of the audience. How much should this fine be in order to really enforce the claim?
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