2. Strategic Competition Over Time Two companies compete in the following strategic interaction in which they can of two possible prices that we call low and high. The payoff matrix stating possible prices chosen by the two companies is given below. In each cell, the nut indicates the payoff to company B, and the number on the right indicates the pas A. Firm A Low High Firm B Low (200,200 ) (400,180) High (180,400) (320,320) Suppose that the firms compete with one another for a substantial and indefinite Both firms discount future payoffs with an interest rate equal to 100%. Hence value of the payoffs from the interaction is as follows: Pa + PA + ... where P is the payoff in period t. (a) (4 points) A Trigger Strategy is one in which a firm prices high in the first p to price high as long as their competitor has always priced high, and drop and remains at a low price forever if their competitor ever sets a low pri Strategy a Nash equilibrium strategy yielding cooperation, that is, making high forever? Be sure to explain your answer. (b) (4 points) A Tit-for-Tat strategy is one in which a firm prices high in period any future period t, chooses a price equal to whatever price was chosen by in the previous period & - 1. Is a Tit-for-Tat strategy a Nash equilibrium s cooperation, that is, making both firms price high forever? Be sure to expla