In oligopoly pricing, firms are caught in a situation called prisoner's dilemma when they:

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In an oligopoly, firms face a prisoner's dilemma when they compete aggressively and earn low profits, which leads to a situation where none of the firms can gain an advantage by changing their strategy, thereby resulting in an equilibrium with low profits for all firms. Cooperating to maximize profits or minimize prices is not a typical outcome of oligopoly pricing due to the presence of strategic interdependence and mutual distrust among firms.

In Oligopoly Pricing, Firms Are Caught in a Situation Called