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Questions

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Zооm аnd Micrоsoft Teаms аre rival video calling providers. Combined, these two brands account for a large share of the video calling industry. Both companies currently advertise their service in public spaces—mainly on roadside billboards, and in buses and airports. Suppose each company earns an annual profit of $550 million. If both companies were to stop advertising, each would earn a profit of $600 million. If only one company were to stop advertising and the other company continued to do so, the company that stopped advertising would earn a profit of $200 million and the company that continued to advertise would earn a profit of $800 million.   Assume this is a simultaneous-move game where Zoom and Microsoft Teams choose to advertise or choose not to advertise, and Zoom and Microsoft Teams cannot collude. What is Zoom’s dominant strategy and explain why.