Two firms have entered an agreement to set prices. The accompanying payoff matrix shows profit for each

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Two firms have entered an agreement to set prices. The accompanying payoff matrix shows profit for each firm in a market depending upon whether the firm cheats on the agreement by reducing its prices.

a. What is the dominant strategy for each firm, if any?

b. What is the Nash equilibrium, if any?image text in transcribed

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Microeconomics

ISBN: 9781260507140

11th Edition

Authors: David Colander

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