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Suppose N Identical Firms Engage in Bertrand Competition in a Stage

Question 19

Multiple Choice

Suppose n identical firms engage in Bertrand competition in a stage game repeated infinitely often.What condition on the discount factor δ\delta is required for firms to be able to tacitly collude on the monopoly industry output?


A) δ1/2\delta \geq 1 / 2 .
B) δ1/n\delta \leq 1 / n .
C) δ1/n2\delta \geq 1 / n ^ { 2 } .
D) δ1(1/n) \delta \geq 1 - ( 1 / n ) .

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