If two noncooperative firms face a “prisoner's dilemma”-type duopoly situation in regard to setting their prices...
If two noncooperative firms face a “prisoner's dilemma”-type
duopoly situation in regard to setting their prices high or
low, which of the following is true?
A. The companies will end up at a situation that is worse for
them, than what they could reach if they were able to communicate
and
cooperate
B. The companies will end up colluding, pricing high to keep profits up
C. One company will gain large profits while the other suffers from low profits
D. Both companies will end up with high profits
Homework Answers
Solution: Option-1
Explanation: When the two non-cooperative firms experiences the “prisoner's dilemma” type duopoly while determining the prices to be low or high, it may face a situation that is worse, in comparison to what could have been reached when were well-informed
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If two noncooperative firms face a “prisoner's dilemma”-type
duopoly situation in regard to setting their prices...
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