Consider the Cartel of Trick and Gear

question 95

Multiple Choice

Consider the cartel of Trick and Gear.The game is repeated indefinitely and each firm employs a tit-for-tat strategy.The equilibrium is

• A)both firms cheat on the agreement.
• B)both firms comply with the agreement.
• C)Trick cheats and Gear complies with the agreement.
• D)Gear cheats and Trick complies with the agreement.
• E)one of the firms exits the market.

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Definitions:

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