-There are two can companies, American and National, which have entered into a collusive agreement. The payoff matrix of economic profits is above. If both firms cheat on the collusive agreement, what amount of economic profit is made by American?

Question

Quizplus · Accepted Answer

If both firms cheat on the collusive agreement, they end up in a situation where neither can achieve the higher profits promised by the collusion, resulting in zero economic profit for American.

-There Are Two Can Companies, American and National, Which Have