Suppose that two firms produce a pair of imperfectly substitutable goods at the same constant marginal cost c = 16 and compete la Bertrand (firm 1 chooses p and firm 2 chooses p2). There are no fixed costs. The market demands that the firms face each period (q for firm 1 and 2 for firm 2) are given by 91 = 24-3p1 + 2p2; 92 = 243p2+2p1. The horizon is infinite (T = ), and all firms discount the future by the same discount factor (0,1). Given these firms compete repeatedly, they may be able to earn higher profits by engaging in tacit collusion. Let 8* be the minimum discount factor that sustains collusion. Answer the following questions.