申論題

Problem 6.
Netscape and Microsoft each develop their own versions of an amazing new Web browser that allows advertisers to target consumers with great precision. Also, the new browser is easier and more fun to use than existing browsers. Each firm is trying to decide whether to sell the browser for $30 or to give it away free. Giving the browser away gets more people using it and brings in more advertising revenue, but selling it brings in a lot of revenue also. If one firm gives the browser away, the other firm will not be able to sell any because the two browsers have exactly the same features. In this event, the firm that tries to sell the browser will lose the development cost, which is $1 billion, and the firm that gives the browser away free will obtain $4 billion. If both firms sell the browser, each firm will obtain $3 billion. If both firms give the browser away free, each firm will obtain $2 billion.

a. Describe this game in terms of its players, strategies, and payoffs.____________________