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Assume that this is a simultaneous move, one shot game, i.e., each player moves simultaneously, and the game is played once. The two firms face

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Assume that this is a simultaneous move, one shot game, i.e., each player moves simultaneously, and the game is played once. The two firms face the following profit matrix. The number in the table show the profit for each firm from each outcome

(a) What is the Nash equilibrium for this game?

(b) If these two firms were able to collude (negotiate) what outcome would they settle on?

(c) What is Firm 1's secure strategy?

(d) What is Firm 2's secure strategy

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Firm 2 Low Price High Price Low Price 2 Firm 1 High Price 6

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