Business, 24.06.2021 20:00, mahmudabiazp3ekot

Suppose Toyota and Honda must decide whether to make a new breed of sideimpact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $500. If both firms make side-impact airbags standard equipment, each company will earn profits of $1.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $0.5 billion (due to lost sales to other automakers). If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $2 billion and the other company will lose $1 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment? Explain.

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Suppose Toyota and Honda must decide whether to make a new breed of sideimpact airbags standard equi...