Here is a payoff matrix completely filled out. There are four possible outcomes for this game, Firm 1's strategy or play listed first: (High, High), (High, Low), (Low, High), (Low, Low).

   For now we won't try to analyize this particular game (as we will see this is particular game is a bit difficult to analyize). Just be certain you understand how to read the matrix so that you know who receives what in each possible outcome.

   In this both firms know everything that is shown in the payoff matrix. Each firm knows the other's possible strategies and payoffs. Games of complete information such as this will be our focus in our study of oligopoly.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved