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Izzydhindsa Izzydhindsa
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Firms X and Y face the following payoffs in terms of profits, according to which of two prices - a high price or a low price - that each one charges. Each firm must choose whether to charge the high price or the low price, but does not know what the other will do.

​Firm X: high priceFirm X low price
Firm Y: high priceX: £10m
Y: £8m		X: £13m
Y: £4m
Firm Y: low priceX: £5m
Y: £9m		X: £7m
Y: £6m
In the absence of collusion, which combination of strategies is most likely to occur?

▸ X sets the high price and Y sets the low price.

▸ Both firms set the low price.

▸ Both firms set the high price.

▸ X sets the low price and Y sets the high price.

▸ Any of the four combinations of strategies is likely, depending on what each firm predicts that its rival is most likely to do.
Textbook 
Essential Economics for Business

Essential Economics for Business


Edition: 5th
Authors:
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tlastertlaster
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Izzydhindsa Author
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3 years ago
Thanks for your help!!
jblazah
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Yesterday
Helped a lot
jaray75
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2 hours ago
this is exactly what I needed
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