FIRM A Compete Produce 35m Collude Produce 20m A: $200m profits A: $300 profits Collude Produce 30m B: $300m profits B: $170m profits FIRM B A: $50 m profits A: $100 profits Compete Produce 50m| B: $400m profits B: $200m profits This prisoner's dilemma game shows the payoffs associated with two firms, A and B, in an oligopoly and their choices to either collude with one another or not. According to the matrix shown, the outcome of the "game" will be: both firms will collude and act like a joint monopolist. both firms will compete. Firm A will compete and Firm B will collude. Firm B will compete and Firm A will collude.

FIRM A Compete Produce 35m Collude Produce 20m A: $200m profits A: $300 profits Collude Produce 30m B: $300m profits B: $170m profits FIRM B A: $50 m profits A: $100 profits Compete Produce 50m| B: $400m profits B: $200m profits This prisoner's dilemma game shows the payoffs associated with two firms, A and B, in an oligopoly and their choices to either collude with one another or not. According to the matrix shown, the outcome of the "game" will be: both firms will collude and act like a joint monopolist. both firms will compete. Firm A will compete and Firm B will collude. Firm B will compete and Firm A will collude.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

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Question

Please help with the attached question

FIRM A
Collude
Compete
Produce 35m
Produce 20m
A: $200m profits
A: $300 profits
Collude
Produce 30m
B: $300m profits
B: $170m profits
FIRM B
A: $50 m profits
A: $100 profits
Compete
Produce 50m B: $400m profits
B: $200m profits
This prisoner's dilemma game shows the payoffs associated with two firms, A and B,
in an oligopoly and their choices to either collude with one another or not. According
to the matrix shown, the outcome of the "game" will be:
both firms will collude and act like a joint monopolist.
both firms will compete.
Firm A will compete and Firm B will collude.
Firm B will compete and Firm A will collude.

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