Question

Coca‑Cola and Pepsi are both releasing a new soda at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix contains the estimated profits for both companies for all possible strategies. Pepsi's profits are in the lower (green) triangle of each cell and Coca‑Cola's profits are in the upper (blue) triangle of each cell. Profits (payoffs) are in millions of dollars. Coca‑Cola Strategy 1 Strategy 2 Pepsi Strategy 1 A $75 $75 B $25 $300 Strategy 2 C $300 $25 D $150 $150 What is Coca‑Cola's dominant strategy? strategy 2 Coca‑Cola does not have a dominan

Answer 1

Answer:

Coca Cola dominant strategy is strategy 1.

Explanation:

Dominant strategy is one in which the business adopts such a strategy which benefits it most among all other available alternative strategies. In the given case Coca Cola dominant strategy is strategy 1. This is because Coca Cola will get the highest possible payoff when it selects strategy 1.