Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 15.2, Problem 3RQ
To determine
Identify the role of collusive agreement to restrict output, raise price and create a game like the prisoners’ dilemma.
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What is the prisoner's dilemma, and what does it have to do with oligopoly?
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Chapter 15 Solutions
Macroeconomics
Ch. 15.1 - Prob. 1RQCh. 15.1 - Prob. 2RQCh. 15.1 - Prob. 3RQCh. 15.1 - Prob. 4RQCh. 15.2 - Prob. 1RQCh. 15.2 - Prob. 2RQCh. 15.2 - Prob. 3RQCh. 15.2 - Prob. 4RQCh. 15.2 - Prob. 5RQCh. 15.2 - Prob. 6RQ
Ch. 15.3 - Prob. 1RQCh. 15.3 - Prob. 2RQCh. 15.4 - Prob. 1RQCh. 15.4 - Prob. 2RQCh. 15.4 - Prob. 3RQCh. 15.4 - Prob. 4RQCh. 15.4 - Prob. 5RQCh. 15 - Prob. 1SPACh. 15 - Prob. 2SPACh. 15 - Prob. 3SPACh. 15 - Prob. 4SPACh. 15 - Prob. 5SPACh. 15 - Prob. 6SPACh. 15 - Prob. 7SPACh. 15 - Prob. 8SPACh. 15 - Prob. 9APACh. 15 - Prob. 10APACh. 15 - Prob. 11APACh. 15 - Prob. 12APACh. 15 - Prob. 13APACh. 15 - Prob. 14APACh. 15 - Prob. 15APACh. 15 - Prob. 16APACh. 15 - Prob. 17APACh. 15 - Prob. 18APACh. 15 - Prob. 19APACh. 15 - Prob. 20APACh. 15 - Prob. 21APACh. 15 - Prob. 22APACh. 15 - Prob. 23APA
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Similar questions
- The labels are the possible profits (in millions) that two firms in a duopoly can make depending on the quantity produced by each firm (Peter's profits are shown in the blue boxes and Paul's profits are shown in the green boxes). Place a number label into each box to show a prisoner's dilemma.arrow_forwardIf a group of sellers could form a cartel, what quantity and price would they try to set? What is the prisoner's dilemma, and what does it have to do with oligopoly?arrow_forwardCarefully define 'collusion' and use a Game theory model to show why it may occur.arrow_forward
- Find the subgames, convert them into Normal-Forms, find the Subgame Perfect Nash Equilibrium step-by-step.arrow_forwardWhy would a firm in oligopoly market structure find game theory a useful tool to employ when making decisions?arrow_forwardIf a market structure is an oligopoly, do Lexus, Cadillac, and Lincoln engage in sticky pricing? Who is the market leader?arrow_forward
- While game theory predicts non-cooperative behavior for a one-shot Prisoner's dilemma. By repeating the game, say 20 rounds, it becomes possible to adopt more complex strategies that allow cooperative play as a Nash Equilibrium in at least some rounds of the game. True Falsearrow_forwardGive two examples other than oligopoly that show how the prisoners' dilemma helps to explain behavior.arrow_forwardWhich of the following is true of a prisoneros dilemma game? It does not have an equilibrium. It has a dominant-strategy equilibrium. It does not have a Nash equilibrium. It ensures better payoffs to the players compared to other games.arrow_forward
- The attached diagram depicts two firms controlled by Jacob and Elsa, and two potential actions each firm might take. Payoffs from action combinations appear in the normal-form depiction of the game played by Jacob and Elsa. What is the Nash equilibrium of the game (Jacob's strategy listed first)? a b Jacob's Actions d Dont' Advertise Advertise, Advertise Advertise Don't Advertise J=300 J=400 Don't advertise, Don't advertise Elsa's Actions Don't advertise (Jacob), Advertise (Elsa) с Advertise (Jacob), Don't Advertise (Elsa) E=200 Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. E=50 Advertise J=100 J=200 E=300 E=100arrow_forwardModeling a cartel as a prisoners’ dilemma game shows that ____________________ may be rational even if ____________________. non-cooperation; cooperation benefits everyone cooperation; cooperation benefits everyone cooperation; cooperation damages everyone non-cooperation; cooperation damages everyonearrow_forwardConsider the following dynamic game: Find the subgame perfect Nash Equilibrium Identify the non-credible threat equilibriumarrow_forward
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