Suppose two small-town video stores, store A and store B, compete. The two stores collude and agree to share the market equally. If neither store cheats on the agreement, each store will make $2,500 a day in economic profits. If only one store cheats, the cheater will increase its economic profits to $4,000 and the store that abides by the agreement will incur an economic loss of $1,000. If both firms cheat, they both will earn zero economic profits. Neither store has any way of policing the actions of the other.
Definitions:
Patronage
The support or regular business given to a store, company, or service provider by customers.
Urban College
An urban college is an institution of higher education located in a city environment, often providing educational opportunities that reflect the unique needs and interests of urban communities.
Respondents
Individuals who answer or reply to surveys, questionnaires, or experiments in research.
Cross Tabulations
Cross tabulations are statistical tools used to analyze and compare the frequency of occurrences or relationships between two or more categorical variables.
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