Two firms compete on
a. Define the Normal form of the stage game and determine the Nash Equilibria, the Cooperative Equilibrium and the Optimal Deviation from cooperation.
b. For the once repeated (2 stages) game, determine if a Nash Equilibrium exists that improves on simply playing the (better) Nash Equilibrium of the stage game twice
c. For the infinitely repeated game, determine what the interest rate would have to be to prevent the firms from cooperating.
d*. Determine the relation between the interest rate and the number of punishment periods in a forgiving trigger strategy that guarantees cooperation.
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