Strategic Business Decision
Two firms, Firm X and Firm Y, are deciding whether to launch a 'High-Price' or 'Low-Price' marketing campaign for their competing products. The table below shows the resulting profits for each firm (in thousands of dollars) based on their combined decisions. The first number in each cell is the profit for Firm X, and the second is the profit for Firm Y.
| Firm Y: High-Price | Firm Y: Low-Price | |
|---|---|---|
| Firm X: High-Price | (50, 50) | (20, 70) |
| Firm X: Low-Price | (70, 20) | (30, 30) |
Assuming Firm X commits to a 'Low-Price' campaign, identify Firm Y's best response and explain your reasoning by comparing the specific profit outcomes for Firm Y.
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