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Economics 5. (10 points) The following provides information for a one-shot game. Firm B Low Price High Price Firm A Low Price (2, 2) (10,

Economics

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5. (10 points) The following provides information for a one-shot game. Firm B Low Price High Price Firm A Low Price (2, 2) (10, -8) High Price (-8, 10) (15, 15) The first number in brackets is Firm A's return, and the second number in brackets is Firm B's return. Firm A and Firm B operate in a duopoly in which you and a rival must simultaneously decide what price to advertise in the weekly newspaper. (a) Does Firm A have a dominant strategy? If yes, what is that dominant strategy? (b) Does Firm B have a dominant strategy? If yes, what is that dominant strategy? (c) Is there a Nash equilibrium (or Nash equilibriums) for the above game? If yes, what is that Nash equilibrium? (d) What will the collusive outcome be for the above game? (e) If a collusive outcome is reached, will either firm have an incentive to cheat on the agreement? Please explain

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