<p>For part a.) Could this be an example of monopolistic competition, since the firms can somewhat control the market and their prices, and there are barriers to entry. Or maybe its oligopolies since theres a very limited number of firms that control the market and there products (bus services) are chosen based on non price determinants. however, there is pretty much no differentiated product. could they form a cartel and cooperate instead of compete?
for part b.) are u assuming rankin wheels knows that roadway already made the decision to go early? if so, rank should go early also to get more profit. but if they dont know i think late would be the best option since they dont sacrifice as much profit loss.<br>
ok last question: for part c.) the dominant strategy of roadway should be to go in early since they make the most money, right?</p>
<p>Ok for part a, ur overthinking the problem. go back to the basic definition of each product market type. when u see a game-theory problem or the stereotypical game-theory matrix like the one in the problem, it is automatically oligopoly. The reasoning is because in game-theory, you make the assumption that the two firms involved are the only one's in the market and that each firm acts based upon the others' actions. This is definitely characteristic of oligopoly and is not characteristic of monopolistic comp. because here, u have many firms involved in moreso endeavors such as advertisement and such, not the decisions of other firms.</p>
<p>For part b, when u see a game theory, yes u assume the other firm knows of the decision. So, if you were to view the problem, you would see that roadway has already chosen early. Therefore, its up to Rankin to choose between a daily profit of 900 or 850. Profit maximization would lead Rankin to choose 900 and go early as well.</p>
<p>For part c, the dominant strategy for roadway is what it should do regardless of what rankin does. If roadway were to choose late, it would only make between $750-700. If it chose early, it could make either $1000 or $950. So early is the best choice as it would make the most money regardless of what rankin does.</p>
<p>I hope you're taking macro too. I love econ, just how much sense everything makes. People who take only 1 of the 2 really are only getting half of the story. They are intertwined so well.</p>