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#14
4 years ago
                                                                   
​​Firm 2​
​​High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
​Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


In the game shown in Table 12.2, when the firms choose their dominant strategies:

▸ the firms will have an incentive to choose the other strategy in the next round.

▸ the firms will make the highest profit.

▸ profits are lower than when the firms choose the strategy that is not the dominant strategy.

▸ it is evidence that the firms are implicitly or explicitly fixing prices.
wrote...
#15
4 years ago
profits are lower than when the firms choose the strategy that is not the dominant strategy.
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