Please no hand written answers unless they are legible.

4. (5 points) Refer to the normalform game of price competition in the payoff matrix below. FirmB Low Price High Price Suppose the game is innitely repeated, and the interest rate is 10 percent. Both rms agree to charge a high price, provided no player has charged a low price in the past. This collusive outcome will be implemented with a trigger strategy that states that if any rm cheats, then the agreement is no longer valid and each rm may make independent decisions. Will the trigger strategy be effective in implementing the collusive agreement? Please explain and show all necessary calculations