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Two firms must simultaneously choose their prices, setting either pH or p1. Suppose payoffs are given by the values in the table below. Firm 2

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Two firms must simultaneously choose their prices, setting either pH or p1. Suppose payoffs are given by the values in the table below. Firm 2 PH PL PM 20 30 20 0 Firm 1 0 15 PL 30 15 (a) Determine the Nash equilibria of the one-shot game. (b) Suppose the game is indefinitely repeated and that the relevant interest rate is r = 10%. Determine the optimal symmetric equilibrium

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