Question

Consider a market with two​ firms, Hewlett-Packard​ (HP) and​ Dell, that sell printers. Both companies must choose whether to charge a high price ​($​) or a low price ​($​) for their printers. These price strategies with corresponding profits are depicted in the payoff matrixLOADING... to the right.​ HP's profits are in red and​ Dell's are in blue. Suppose HP and Dell are initially at the​ game's Nash equilibrium. ​Then, HP and Dell advertise that they will match any lower price of their competitors. For​ example, if HP charges ​$​, then Dell will match that price and also charge ​$. What effect will matching prices have on profits​ (relative to the Nash equilibrium without price​ matching)? Assuming HP and Dell can coordinate to maximize​ profits, HP's profit will change by ​$ nothing and​ Dell's profit will change by nothing. ​(Enter either positive or negative numeric responses using​ integers.)

Answer 1

Answer: Hello your question is poorly written attached below is the complete question

answer : Change in profits

               =  $55 ,  $55

Explanation:

From the Question( Nash equilibrium ) we can see that there four combination of charges

HP, Dell ($450, $450 ) : profit ( $100, $100 )

HP ,Dell ($450, $250 ) :

HP, Dell ( $250, $450 )

HP, Dell ( $250, $250 ) profit ( $45, $45 )

when lower price is adopted profit made = ( $45 , $45 )

when Higher price is adopted profit made = ( $100, $100 )

Hence The effect of matching prices on profits​ (relative to the Nash equilibrium without price​ matching)

Assuming HP and Dell coordinates

HP's profit will changes by = $100 - $45 = $55

Dell's profit will change by  = $100 - $45 = $55