Subject: Manegerial economics & policy Suppose this game is repeated indefinitely. Suppose both firms charge the high price. How can this strategy become stable in the repeated game? What if the game were only repeated for a set number of periods?

Subject: Manegerial economics & policy Suppose this game is repeated indefinitely. Suppose both firms charge the high price. How can this strategy become stable in the repeated game? What if the game were only repeated for a set number of periods?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Subject: Manegerial economics & policy

Suppose this game is repeated indefinitely.

Suppose both firms charge the high price. How can this strategy become stable in the repeated game?

What if the game were only repeated for a set number of periods?

High Price
COMPANY B
Low Price
COMPANY A
High Price
400
400
Low Price
100
100
200
600
*All numbers include potential profit
600*
200

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