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COLLUSION 4. REPEATED GAMES Two firms must simultaneously choose their prices, setting either PH or PL. Suppose payoffs are given by the values in the
COLLUSION 4. REPEATED GAMES Two firms must simultaneously choose their prices, setting either PH or PL. Suppose payoffs are given by the values in the table below. Firm 2 PH PL Firm 1 PH 30,30 0,50 PL 50,0 20,20 (1) Determine the Nash equilibria of the one-shot game. (2) Suppose the game is indefinitely repeated and that the discount rate is 8 = 0.7. Is there an equilibrium in which both firms always choose the high price? Justify your answer, and if so, describe the strategies players use. (3) Suppose that instead of two firms there are 10 firms. Would this change your answer to the previous
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