There are two producers of avocado: CaliCado, located in California; and ChileCado, located in Chile.1 Sometimes I will refer to CaliCado as firm 1 and ChileCado as firm 2. For simplicity, we will divide each year into summer and winter as experienced in North America. Demand for avocados is stable across time, and is given by D(p) = 55 p. However, the cost of producing avocado differs by firm and by season. Specifically, the marginal cost of producing avocados equals c1 = 5 for CaliCado in summer (because that is the growing season in California), but equals c1 = 10 in winter. By contrast, the marginal cost of producing avocados equals c2 = 5 for ChileCado in "winter" (which is summer in Chile, and therefore the growing season) and equals c2 = 15 in summer. (See table below) Producer Summer Winter CaliCado, c1 $5 $10 ChileCado, c2 $15 $5 Table 1: Marginal cost of producing avocados for CaliCado and ChileCado by seasonThe US FTC blocks the merger of the two firms. So they decide instead to collude, using a grim trigger strategy. From now on, assume that the pricing game is repeated an infinite number of period (where each