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Scenario

Two firms must simultaneously elect a technology to use for their compatible products. If the firms adopt different standards, few sales result. A common standard leads to higher sales. One technology is significantly preferred by consumers over the other. Thus, if the companies can standardize on the preferred technology, each obtains maximal profits.

Description

There are two pure strategy equilibria. Both firms prefer the same equilibrium which Pareto dominates the other. A mixed strategy equilibrium also exists.

Example

		Firm 2
		good	bad
Firm 1	good	5,5	0,0
	bad	0,0	3,3

General Form

		Player 2
		L	R
Player 1	U	a,w	b,x
	D	c,y	d,z

Where the following relations hold:
a>d>b; a>d>c
w>z>y; w>z>x

updated: 12 August 2005
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