a) Does either player in this game have a dominant strategy?

b) Does your answer to part (a) help you figure out what the other

player should do? What is the Nash equilibrium? Is there only

one?

c) Big Brew threatens Little Kona by saying, "If you enter, we're

going to set a low price, so you had better stay out." Do you

think Little Kona should believe the threat? Why or why not?

d) If the two firms could collude and agree on how to split the total

profits, what outcome would they pick?