Two firms, Soapy Inc. and Sudsies Inc., are the only producers of washing powder.If they both charge a market price of $5, Soapy will earn a profit of $1,000 will Sudsies will earn a profir of $800.If Soapy charges a price of $4 while Sudsies charges $5, Soapy will increase its profits to $1,500, while Sudsies incurs an economic loss of $500.If Sudsies charges a price of $4 while Soapy charges $5, Sudsies will increase its profits to $1200, while Soapy earns an economic loss of $300. If they both charge a price of $4, Soapy will earn a profit of $500 while Sudsies earns a profit of $300.

Describe the dominant strategy for each firm and the equilibrium. Explain why there is an incentive to collude