In the pricing decision in Technical Problem 15, can Alpha make a credible threat to punish Beta with a retaliatory price cut? Can Beta make a credible threat of a retaliatory price cut?

Data From Problem 15

Alpha and Beta, two oligopoly rivals in a duopoly market, choose prices of their products on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make.

Transcribed Image Text:

Alpha's price High Low A B High $200, $300 $50, $350 Beta's price Low $300, $150 $75, $200