To the right is a version of the Oligopolists' Dilemma. It illustrates the constant tension that exists within the oligopoly structure. On the one hand, if both firms can cooperate (or collude) by agreeing to charge high prices profits for both can be quite high (even if such agreements are illegal). On the other hand either one can do even better by cheating on that agreement and lowering prices if the other firm maintains high prices.
If this game is repeated can the two firms find a way to collude (cooperate) and charge high prices?
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