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Read Eye on the Wireless Oligopoly in the eText or click on the icon LOADING... to open a copy . Now use the following information to work the exercise.
AT&T and Verizon have two pricing strategies: Set a high (monopoly) price or set a low (competitive) price.
If they both set a competitive price, economic profit for both is zero.
If both set a monopoly price, AT&T makes an economic profit of $100 million and Verizon of $200 million.
If AT&T sets a low price and Verizon a high price, AT&T makes an economic profit of $200 million and Verizon incurs an economic loss of $100 million.
If AT&T sets a high price and Verizon sets a low price, AT&T incurs an economic loss of $50 million and Verizon makes an economic profit of $250 million.
Part 2
Create the payoff matrix for this game by entering the eight economic profit values below.
