Assignment 2: Toy Game

Strategic Behavior and Industrial Organization

Instructions
1. Each team should submit only one response.
2. The response of every team should clearly indicate the names of its two
partners
3. No two teams should consult each other for the response.
4. If any teams response is found even remotely identical to that of the
other, both teams will be marked zero for the assignment.
5. Both team members will be awarded the same grade.

TOY GAME
Description:
Read the Harvard Business Review Case Toy Game, Adam Brandenburger,
in your folder and answer the following questions.

How would you play?

1. First suppose that neither Matchbox nor Hot Wheels gives out rebate
coupons. What price do you expect Matchbox and Hot Wheels cars to
fetch?
2. Next suppose that Matchbox, but not Hot Wheels, gives out rebate
coupons. What price of prices do you expect Matchbox and Hot Wheels
cars to fetch now?
3. Next, suppose that both Matchbox and Hot Wheels give out rebate
coupons. What price or prices do you expect Matchbox and Hot Wheels
cars to fetch now?
4. Is there any pure strategy Nash equilibrium for case (3)?