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Suppose two firms chooses their prices simultaneously each period and the game repeats infinitely period. Both firms share the same constant marginal cost and produce
Suppose two firms chooses their prices simultaneously each period and the game repeats infinitely period. Both firms share the same constant marginal cost and produce homogeneous good. Suppose they follow the grim trigger strategies we described in class, which statement is correct?
- The grim trigger strategy profile can be a NE if the discount factor equals0.45.
- The grim trigger strategy profile can be a NE if the discount factor equals 0.65.
- The grim trigger strategy profile can be a NE if the discount factor equals 0.35.
- The grim trigger strategy profile can be a NE if the discount factor equals 0.49.
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