Your fast response is my greatest help.

1.

Q: Referring to the hypothetical 2-by-2 matrix of prisoners' dilemma scenario below, discuss why there exists inherent incentive for Coca-Cola and PepsiCo to provide discount price, instead of implicitly agreeing with each other on maintaining a common regular price.

PepsiCo Regular price Discount price (Collusion) (Defection) Regular price Both make 500 Coca-cola makes 0 Pepsi makes 750 Coca-Cola Discount Coca-cola makes 750 price Pepsi makes 0 Both makes 250