Zellers and Wal-Mart are two of Canada’s largest retailers. To reflect the strong position of the Canadian dollar, each firm is considering lowering prices on some goods in Canadian stores. The following table displays the payoffs for each firm associated with lowering prices (or not), given the other firm’s decision:
If Zellers
And Wal-Mart
Then, Zellers’s
And Wal-Mart’s
decides to . . .
decides to . . .
profits are . . .
profits are . . .
Keep prices
Keep prices
$200MM
$250MM
the same
the same
Keep prices
Drop prices
$150MM
$280MM
the same
Drop prices
Keep prices
$230MM
$190MM
the same
Drop prices
Drop prices
$180MM
$220MM
If given the opportunity, how much would Zellers be willing to spend for the right to move first?