Suppose Two Firms, FastNet and SmartCast Are the Only Fast

question 148

Multiple Choice

Suppose two firms, FastNet and SmartCast are the only fast Internet providers in a city. They have identical costs and one firm's service is a perfect substitute for the other's. The industry is a natural duopoly. Suppose that FastNet and SmartCast collude and agree to share the market equally. In this scenario, in Nash equilibrium,

• A) both firms cheat to produce less than the agreed amount.
• B) one firm complies with the agreement while the other cheats to produce more than the agreed amount.
• C) both firms cheat to produce more than the agreed amount.
• D) both firms comply with the agreement.

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Definitions:

Servant Leadership

A leadership philosophy that emphasizes the leader's role as serving the needs of others, putting the well-being of their team and organization first.

Empowerment

The process of giving employees power and responsibility to make decisions and contribute to the organization's success, often leading to increased job satisfaction and productivity.

Reward Power

A form of power that is based on the ability to distribute rewards that others view as valuable.

Visionary Leadership

A leadership style characterized by the ability to create and articulate a realistic, credible, attractive vision of the future for an organization or company that grows out of and improves upon the present.