(d) Consider a simultaneous-move game between two firms choosing to sell their product at either £6, £7 or £8. The actio

[answerhappygod]

D Consider A Simultaneous Move Game Between Two Firms Choosing To Sell Their Product At Either 6 7 Or 8 The Actio 1 (80.22 KiB) Viewed 37 times

(d) Consider a simultaneous-move game between two firms choosing to sell their product at either £6, £7 or £8. The actions and payoffs are given in the matrix below Firm 1's prices £6 Firm 2's Prices £6 £7 4,5 3,5 0,4 2,1 -1,1 4,3 €8 21 3,0 0,2 £7 E8 What are the Nash equilibria of this game? Game theory is often used by firms competing under an oligopoly as a means of determining their best strategy. Why is game theory a useful tool and which characteristics of an oligopoly make it particularly useful for firms competing in this market structure? One outcome of an oligopoly is that firms may have an incentive to collude. Explain some of the conditions that make collusion more likely to occur and how game theory can explain why collusive agreements often break down.