Business, 09.10.2019 21:00 Trinhphuongtran

Suppose the market for widgets (a fictitious good) is characterized by an infinitely repeated oligopoly game (notice i have not given you any details on the game itself). a monopolist in this market would earn $12 million each period, but the current market is comprised of four (4) suppliers, each of whom earn $1 million per period in the nash equilibrium of the one-shot game. collusion is illegal, and these are honest, law-abiding firms. nevertheless, they recognize their own interdependence. if the firms had somehow agreed to collectively produce the monopoly level of output, they all know that a firm who defects from that agreement would earn $4 million that period. supposing that each of the players were to play a trigger strategy, compute the value of alpha above which such a strategy, when played by all firms, would represent a nash equilibrium of the infinitely repeated game. your answer should be a decimal between 0 and 1, rounded to the third decimal place (e. g. 0.768).

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Suppose the market for widgets (a fictitious good) is characterized by an infinitely repeated oligop...

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