Scenario 17-2. Imagine that two oil companies, Mobile and Cargo, own adjacent oil fields. Under the fields is a common pool of oil worth $96 million. Drilling a well to recover oil costs $3 million per well. If each company drills one well, each will get half of the oil and earn a $45 million profit ($48 million in revenue - $3 million in costs). Assume that having X percent of the total wells means that a company will collect X percent of the total revenue.
-Refer to Scenario 17-2.If Mobile and Cargo are able to successfully collude to maximize their joint profits,Mobile will earn

Question

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If Mobile and Cargo collude, they will decide to each drill one well, ensuring that they both earn a $45 million profit. This is the highest joint profit they can achieve, as any other strategy will result in one company earning less than $45 million. Therefore, Mobile will earn $45 million and Cargo will also earn $45 million.