Using Equation 12.15 from the text, graph the relationship between the number of firms in the market,

Question:

Using Equation 12.15 from the text, graph the relationship between the number of firms in the market, N, and probability, g, that the game continues from one period to the next, needed to sustain collusion in an indefinitely repeated game. What is the greatest number of firms for which collusion would be sustainable if g = 0.95?

πM < (πM/N) (1/1 – g)



Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Microeconomics and Its Application

ISBN: 978-0324599107

11th edition

Authors: walter nicholson, christopher snyder

Question Posted: