12.2 Types of Nash Equilibria

The games described in Tables 12.1, 12.2, and 12.3 each have a unique Nash equilibrium: For only one combination of strategies is each firm’s strategy a best response to its rival’s strategy. The Cournot and Bertrand models of Chapter 11 are other examples of games with unique Nash equilibria. We now consider two other situations. First, we examine games that have multiple Nash equilibria. Second, we consider games in which the firms’ strategies require them to choose randomly between possible actions.

Multiple Equilibria

Many oligopoly games have more than one Nash equilibrium. When a game has multiple Nash equilibria, we may be able to use additional criteria to predict the likely outcome. The scheduling or coordination ...

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