6. Explain the general meaning of the following profit payoff matrix for oligopolists X and Y. All profit figures are in thousands. LO4

a. Use the paoyff matrix tox pelain the mutual interdependence that characterizes oligopolistic industries.

b. Assuming no collusion beetwen X and Y, what is the likely pricing outcome?

c. In view f oyour answer to part

b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement?

Transcribed Image Text:

Y's possible prices X's possible prices $40 $57 $35 $59 $40 $60 $55 $50 $55 $35 $69 $58