Nestl’s has over one hundred production facilities that all purchase hair nets and other hygienic supplies through independent suppliers.
Nestlé’s has over one hundred production facilities that all purchase hair nets and other hygienic
supplies through independent suppliers. Nestlé created a centralized purchasing system that is
cumbersome to use has the potential to bargain for lower prices. Suppose that a division can
purchase hairnets for $8 independently. If they all purchase through the central system, hairnets
cost $6. But if one division uses the system and the other purchases independently, the cost to the
first is $9 while the cost to the second is $7. What does the simultaneous move game look like
and what is the equilibrium?
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