1. Assume the payoff matrix for a game is as follows.Firm BXYFirm A6,614,222, 149,9What is the maximum interest rate at which collusion could occur between these firmswith a trigger strategy if the game is played an infinite number of times?

From the given payoff matrix, we know, Collusive payoff = 9Cheating payoff = 14Competition payoff =…

Answered: 1. Assume the payoff matrix for a game…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

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1. Assume the payoff matrix for a game is as follows. Firm B X Y Firm A 6,6 14,2 2 2, 14 9,9 What is the maximum interest rate at which collusion could occur between these firms with a trigger strategy if the game is played an infinite number of times?