Conceptually Oligopoly models hold that firms compete in the same strategic variable under Cournot or Bertrand models. No consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model. The matrix shows the possible options to retain the collusive price (collude) or to lower the price in an attempt to increase the firm's mai share (cutting down price). The payoffs are stated in terms of millions of dollars of profits earned per year. In your opinion, wl is the Nash equilibrium for this game?
Conceptually Oligopoly models hold that firms compete in the same strategic variable under Cournot or Bertrand models. No consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model. The matrix shows the possible options to retain the collusive price (collude) or to lower the price in an attempt to increase the firm's mai share (cutting down price). The payoffs are stated in terms of millions of dollars of profits earned per year. In your opinion, wl is the Nash equilibrium for this game?
Chapter1: Making Economics Decisions
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Problem 1QTC
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![Conceptually Oligopoly models hold that firms compete in the same strategic variable under Cournot or Bertrand models. Now
consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model. The matrix
shows the possible options to retain the collusive price (collude) or to lower the price in an attempt to increase the firm's market
share (cutting down price). The payoffs are stated in terms of millions of dollars of profits earned per year. In your opinion, what
is the Nash equilibrium for this game?
Firm B cuts
Firm B colludes
Firm A cuts
6,6
24,0
Firm A colludes
0,24
12,12
Oa.
A cuts and B colludes.
O b. B cuts and A colludes.
О с.
Both firms collude.
O d. Both firms cut prices.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff9f01a79-0647-4b27-8f56-56ca13248d07%2F2f42d9fc-deda-47ea-b2de-fbed9543ad0e%2Fvfzdekb_processed.png&w=3840&q=75)
Transcribed Image Text:Conceptually Oligopoly models hold that firms compete in the same strategic variable under Cournot or Bertrand models. Now
consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model. The matrix
shows the possible options to retain the collusive price (collude) or to lower the price in an attempt to increase the firm's market
share (cutting down price). The payoffs are stated in terms of millions of dollars of profits earned per year. In your opinion, what
is the Nash equilibrium for this game?
Firm B cuts
Firm B colludes
Firm A cuts
6,6
24,0
Firm A colludes
0,24
12,12
Oa.
A cuts and B colludes.
O b. B cuts and A colludes.
О с.
Both firms collude.
O d. Both firms cut prices.
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