In a repeated game of Bertrand competition, suppose two firms are playing the grim trigger strategy. They discount future payoffs at B. A firm will play the monopoly price and earn 8 everyY period, so long as the other firm does the same. However, if a firm deviates from playing the monopoly price, the other firm plays the one-shot Bertrand outcome forever.

In a repeated game of Bertrand competition, suppose two firms are playing the grim trigger strategy. They discount future payoffs at B. A firm will play the monopoly price and earn 8 everyY period, so long as the other firm does the same. However, if a firm deviates from playing the monopoly price, the other firm plays the one-shot Bertrand outcome forever.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.5P

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In a repeated game of Bertrand competition, suppose two firms are playing the grim trigger strategy. They discount future payoffs at B. A firm will play the monopoly price and earn 8 every period, so long as the other firm does the same. However, if a firm deviates from playing the monopoly price, the other firm plays the one-shot Bertrand outcome forever. Collusion is a Nash equilibrium if B is Select J [ Select) Space 1 options: less than or equal to, equal to, greater than or equal to Space 2 options: 0, 0.5, 1, 8, 16
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