Consider a Duopoly Market Where the Players Agree to Collude

question 51

Multiple Choice

Consider a duopoly market where the players agree to collude.The single-period prisoner's dilemma game applied to this market generally predicts that:

• A)the firms will maintain the collusion agreement.
• B)one firm will cheat on the agreement while the other will not.
• C)both firms will cheat and the collusion agreement will break down.
• D)the firms will be worse off from collusion than cheating.

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