GAME THEORY AND OLIGOPOLY. Profit payoff Matrix for Subways and Quiznos (Sandwich Style Resturants. Below is the profit payoff matrix for these two restaurants depending on whether they set their Chicken sandwich price HIGH or LOW
TABLE 1 Quiznos LOW price Quiznos HIGH price
Subway LOW price $7 million for Subway $7 million for Quiznos
$12 million for Subway $5 million for Quiznos
Subway HIGH price $5 million for Subway $12 million for Quiznos
$9 million for Subway $9 million for Quiznos
a) Using Table, what if any is the collusive outcome? Explain whether it will occur.
b) Using Table, what if any is the Nash equilibrium? Explain whether it will occur.
