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In an industry with demand curve P = 160 - Q there are 2 firms with marginal costs (MC) of production equal to $0 for
In an industry with demand curve P = 160 - Q there are 2 firms with marginal costs (MC) of production equal to $0 for each. If the firms compete, each will produce 53 units while if they collude each will produce 40 units. Show in a matrix the NASH equilibrium in this simultaneous game where strategies available to each firm are to compete or collude. Assume that each firm seeks to MAXIMIZE its profits, but consider interdependence between the two firms.
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