Microeconomics 20th Edition by Campbell McConnell, Stanley Brue,Sean Flynn

Exercise 8

Explain the general meaning of the profit payoff matrix below for oligopolists X and Y. All profit figures are in thousands.
a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries.
b. Assuming no collusion between X and Y, what is the likely pricing outcome
c. In view of your answer to 8b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement