Question

Table 19 Store X Lower Prices X: $5 Y: $5 Don't Lower Prices X: $1 Y: $10 Lower Prices Store Y Don't Lower X: $10 Prices Y: $1 X: $20 Y: $20 19) Refer to Table 19. Store X and Store Y must decide whether or not) to lower their prices. The table gives the economic profit made by Store X and Store Y. Indicate the collusive outcome:

Answer 1

Collusive outcome of the game is. (Dont Lower Poice, pont dow er fruce) which is also a hash equilibrium of this game first considea for Store x. if store y is Choosing Lower Prices Then for store & is to benefitiale To Choose Lower prices and get The economic progit of $5. and Y earn $5 earn if store y is not choosing dower prices, Then Jor store x is benefitiale To Choose Dont Lower prices, and earn $20 as. economic profit. and y also earn $20 Now consider for store y if store x is choosing Lower Price Then Store y also choose lower price and get economic Rojit oy $5. where as if x is choose dont Lower Prices,

Thon Store y also choose dont lower price and both will get $20 so it is mitually benefitiale for both Storex and Store & is to choose dont dowco Prices-