Two profit-maximising firms produce differentiated products at no cost and compete in prices. Letting i, j = 1, 2 with i = j, the inverse demand function and the corresponding demand function faced by each firm (i) are:

p(i) = 1200 q(i) (2/3)q(j) and q(i) = (3/5)*(1200 3p(i) + 2p(j))

Suppose that two firms compete for infinitely many periods and agree to both set their price to the monopoly level (p = 600). Moreover, both firms follow a trigger strategy: if one firm deviates from the agreement in period t, the other sets its price to the duopoly equilibrium (p = 300) from period t + 1 to infinity. Let 1 and 2 (with 1, 2 [0, 1]) be the discount rates of firms 1 and 2, respectively. For what values of 1 and 2 is the collusive agreement sustainable?

(Bertrand model was used to determine the equilibriums)