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6. Two busmesses, Castor and Pollux, are the only two sellers in a particular market. They have just signed an agreement to raise their prices.

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6. Two busmesses, Castor and Pollux, are the only two sellers in a particular market. They have just signed an agreement to raise their prices. Each firm is considering whether to charge the agreed-upon price or whether instead, through cheating, to charge the same price as before. If Castor cheats while Pollux refrains from doing go, then Castor makes an annual profit of $500 000 while Pollux makes a profit of $200 000. On the other hand, if Pollux cheats and Castor refrains from doing so, then Castor makes $200 000 and Pollux makes $500 000 annually. If both refrain from cheating, each makes $400 000, but if both cheat, each makes $300 000. a. Construct a diagram similar to Figure 6.12 to show the possible strategies for both Castor and Pollux. b. If cheating by either seller is easily discovered, what strategy are Castor and Pollux likely to chose? Why? c. If cheating is not easily discovered, what strategy are both of them likely to chose? How does this result correspond to the prisoner's dilemma

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