300 word response using pay table provided

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  Suppose
that GE is trying to prevent Maytag from entering the market for high
efficiency clothes dryers. Even though high efficiency dryers are more
costly to produce, they are also more profitable as they command
sufficiently higher prices from consumers. The following payoffs table
shows the annual profits for GE and Maytag for the advertising spending
and entry decisions that they are facing.

GE

MAYTAG


Advertising = $12m

Advertising = $0.7m


Stay Out

$0, $30m

$0, $35m


Enter

$1m , $20m

$12m, $15

Based on this information, can GE successfully prevent Maytag from
entering this market by increasing its advertising levels? What is the
equilibrium outcome in this game?

Suppose that an analyst at GE is convinced that just a little bit
more advertising by GE, say another $2m, would be sufficient to deter
enough customers from buying Maytag, thus, yield less than $0 profits
for Maytag in the event it enters. Suppose that spending an extra $2m on
advertising by GE will reduce its expected profits by $1.5 m,
regardless of whether Maytag enters or stays out. Would this additional
spending on advertising achieve the effect of deterring Maytag from
entering? Should GE pursue this option?

Guided Response:

In 300 words or more, please, provide your response to the above
discussion question. Please, show all your calculations and explain your
responses. Respond substantively to at least two of your classmates’
postings. Substantive responses use theory, research, and experience or
examples to support ideas and further the class knowledge on the
discussion topic.

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