Practice+Final+2

Howmightyouachievesuchcrediblecommitment

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Unformatted text preview: Us
$21m.

If
BAStar
locates
in
the
Village
and
K‐R‐Us
in
Midtown,
then
 BAStar
gets
$22m
and
K‐R‐Us
$9m.

Finally,
if
BAStar
locates
in
Midtown
and
K‐R‐Us
in
the
 Village
then
BAStar
gets
$9m
and
K‐R‐Us
$18m.
 a) 
[10
points]
Suppose
BAStar
and
K‐R‐Us
must
decide
simultaneously
where
to
 locate.

Describe
the
game
played
between
the
two
firms.

Are
there
any
 dominant
strategies...
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