The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. FIRM B Collude Produce 20m Collude Produce 30m B: $300m profits A: $200m profits Given the payoffs in this matrix, Firm A: Compete Produce 50m B: $400m profits FIRM A A: $50m profits 1. does not have a dominant stratgegy 2. has a dominant strategy to compete 3. has a dominant strategy to collude 4. none of these are true Compete Produce 35m A: $300m profits B: $170m profits A: $100m profits B: $200m profits
The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. FIRM B Collude Produce 20m Collude Produce 30m B: $300m profits A: $200m profits Given the payoffs in this matrix, Firm A: Compete Produce 50m B: $400m profits FIRM A A: $50m profits 1. does not have a dominant stratgegy 2. has a dominant strategy to compete 3. has a dominant strategy to collude 4. none of these are true Compete Produce 35m A: $300m profits B: $170m profits A: $100m profits B: $200m profits
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
Problem 17P
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Transcribed Image Text:The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm
B. These firms are in an oligopoly and they can choose to either collude or compete.
FIRM B
Collude
Produce 20m
Compete
Produce 50m
Collude
Produce 30m B: $300m profits
A: $200m profits
Given the payoffs in this matrix, Firm A:
B: $400m profits
FIRM A
A: $50m profits
1. does not have a dominant stratgegy
2. has a dominant strategy to compete
3. has a dominant strategy to collude
4. none of these are true
Compete
Produce 35m
A: $300m profits
B: $170m profits
A: $100m profits
B: $200m profits
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