Use the following Payoff Matrix for Company A and Company B, the only two companies that produce widgets, to answer the following questions.

1. What is the expected outcome of this one-time (not repeated) game? Defend your answer.
2. How might your answer change if the game is repeated indefinitely?
3. To what extent does this example illustrate why firms in some concentrated oligopolies exhibit cooperative or collusive behavior even though they don't explicitly collude?

Company B Lowers Price

Company B Does Not Lower Price

Company A Lowers Price

Company B's Payoff: $100

Company A's Payoff: $100

Company B's Payoff: -$100

Company A's Payoff: $1000

Company A Does Not Lower Price

Company B's Payoff: $1000

Company A's Payoff: -$100

Company B's Payoff: $500

Company A's Payoff: $500