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Satsume Satsume
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6 years ago
Consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model:

   Firm B cuts   Firm B colludes
Firm A cuts   6,6   24,0
Firm A colludes   0,24   12,12


Here, the possible options are to retain the collusive price (collude) or to lower the price in attempt to increase the firm's market share (cut).  The payoffs are stated in terms of millions of dollars of profits earned per year.  What is the Nash equilibrium for this game?
A) Both firms cut prices.
B) A cuts and B colludes.
C) B cuts and A colludes.
D) Both firms collude.
Textbook 
Microeconomics

Microeconomics


Edition: 8th
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oracledarrenoracledarren
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6 years ago
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Satsume Author
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6 years ago
Brilliant ツ
emilyas19
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Yesterday
this is exactly what I needed
ediblefruitz
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This helped my grade so much Perfect
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