Twin Cities Seed (TCS) Company and River Valley Seed (RVS) C…
Twin Cities Seed (TCS) Company and River Valley Seed (RVS) Company produce and process seeds for agricultural use. Both companies are considering expanding their production facilities in 2026 to increase their profitability. Firms may choose either a large expansion to capacity, a small expansion, or no expansion. Suppose that both firms have perfect information about all payoffs and must choose their strategy simultaneously. The table below plots the present value of payoffs (in $ millions) for TCS and RVS based on the potential decisions by either firm. The payoff for TCS is first to appear in the cell, RVS is the second: (TCS,RVS). For example, if TCS chooses a large expansion and RVS chooses no expansion, TCS will net $19 million and RVS will net $10 million. Based on the information provided, what do you expect to happen and why? RVS Capacity Expansion No Expansion Small Expansion Large Expansion TCS Capacity Expansion No Expansion 30, 30 15, 33 10, 19 Small Expansion 33, 15 24, 24 9, 15 Large Expansion 19, 10 15, 9 3, 3