Business homework help
Business homework help. The market for taxi services in a Midwestern town is monopolized by firm 1. Currently, any taxi services firm must purchase a $40 thousand Medallion from the city in order to offer its services. A potential entrant (firm 2) is considering entering the market. Since entry would adversely affect firm 1s profits, firm 1 is planning to call to request that the city changes the medallion fee by $F thousand. In the following extensive game, C and NC represent firm 1s strategies call to change fee and dont call to change fee; E and NE represent firm 2s strategies enter and not enter. (all payoffs are in thousands of dollars and include the current medallion fee of $40 thousand). Determine the change in the medallion fee that maximizes firm 1s profits.