Explain Prisoner’s Dilemma. Show how advertising by two competing firms may lead to inefficient distribution of resources

What does the prisoner’s dilemma teach us about the behavior of oligopolists?

Compare the quantity and price of an oligopoly tothose of a perfectly competitive market.

Macmillan Learning Big Bear and Coffeebean are coffee chains in a metro area deciding on a pricing strategy. Use the payoff matrix below to answer the questions. Assume that both firms have complete information on each other's payoff structure and that they choose their pricing strategies simultaneously. Big Bear High price Low price $6 million $3 million High price Coffeebean $6 million $8 million $8 million Low price $3 million $5 million $5 million What is the Nash equilibrium in this game? the lower right quadrant If this is a repeated game, what is one strategy the firms could employ to penalize noncooperative behavior?