21 Jul IF TOYOTA AND HONDA WERE ABLE TO COOPERATE WOULD YOU EXPECT THIS SAME OUTCOME?
Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equ Show more Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1000. If both firms make side-impact airbags standard equipment each company will earn profits of $1.8 billion. If neither company adopts the side-impact airbag technology each company will earn $1 billion. If one company adopts the technology as standard equipment and the other does not the adopting company will earn a profit of $2.6 billion and the other company will earn $-1 billion. If you were a decision maker at Honda would you make side-impact airbags standard equipment? ( ) No. ( ) Yes. ( ) There is not enough information to answer the question. If Toyota and Honda were able to cooperate would you expect this same outcome? ( )There is not enough information to answer the question. ( ) No. ( )Yes. Show less
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