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In a Duopoly Game,we Observe the Following Payouts

Question 20

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In a duopoly game,we observe the following payouts.If the two firms collude they each make an economic profit of $50,000.If one firm cheats,then that firm makes an economic profit of $60,000 and the other incurs an economics loss of $10,000.If both firms cheat,then they both make zero economic profit.What is the Nash equilibrium?


A) Both firms cheat.
B) Neither firm cheats.
C) One firm cheats but we don't know which one.
D) Only the larger firm cheats.
E) Only the smaller firm cheats.

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