Figure: Pricing Strategy in Cable TV Market Il CableNorth High price Low price C

Question

Figure: Pricing Strategy in Cable TV Market Il CableNorth High price Low price CableNorth eams $100,000 CableNorth eams S130,000 High s price CableSouth earns $100,000earns $80,000 CableSouth CableNorth eams $80,000 CableNorth eams $90,000 CO Low price CableSouth eans $130,000 CableSouth earns $90,000 (Figure: Pricing Strategy in Cable TV Market Il) The dominant strategy for CableSouth: A. is to charge a low price. B. is to charge what CableNorth does. C. is to charge a high price. D. does not exist.

Explanation / Answer

Answer : Option A is correct.

Because according to the given payoff matrix box, the low price strategy carries the highest payoffs for player CableSouth in comparison to other strategy payoffs for him. Dominant strategy is that strategy which carries the highest payoffs for a player and hence the strategy - Low price is the dominant strategy for player - CableSouth.

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