Question
Please Help the above question refer to the graph
Bain's Bobbleheads and Krieg's Collectibles are the two major producers of collectible bobblehead dolls. Each makes its output decision without knowledge of the other firm's decision. The payoffs in the game matrix below represent profit numbers for each firm, and each firm prefers more profit to less. If the two firms were to illegally collude and set output levels, how much would they agree to produce? Does anyone have a dominant strategy? If so, which firm and what is the strategy? Is there a Nash equilibrium? If so, what is it?
Explanation / Answer
a) 5000
b) Bain - 7000
Kreig - 7000
c) Bain - 7000, Kreig - 7000
B - $24, K - $34