In an ongoing price war between burger haven (locally owned) and macarches (a chain), both restaurant managers plan to change the price of a hamburger by 10¢. if they both raise their prices, there will be no change in their market shares, but if they both lower their prices, the chain's national advertising will ensure that macarches gains 4% of the market. again because of advertising, if burger haven lowers their price and macarches raises their price, burger haven will gain only 2% of the market, but if burger haven raises their price and macarches lowers their price, macarches will gain 10% of the market. use this information to decide what the managers should do. macarches l r burger haven l r % % % %

For example, the upper right cell shows that if expresso advertises and beantown doesn't advertise, expresso will make a profit of $15 million, and beantown will make a profit of $2 million. assume this is a simultaneous game and that expresso and beantown are both profit-maximizing firms. if expresso decides to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if expresso decides not to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if beantown advertises, expresso makes a higher profit if it chooses . if beantown doesn't advertise, expresso makes a higher profit if it chooses . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? expresso will choose to advertise and beantown will choose not to advertise. expresso will choose not to advertise and beantown will choose to advertise. both firms will choose to advertise. both firms will choose not to advertise.