Consider the collusion of Mom Wakeboards and Pop Surfboards. If the game is played repeatedly, and both Mom and Pop employ a Grim trigger strategy, the equilibrium will be:
A)the competitive equilibrium.
B)the monopoly equilibrium.
C)the same as if there were only one consumer in the industry.
D)one in which consumer surplus is maximized.

Question

Quizplus · Accepted Answer

In a repeated game with a Grim trigger strategy, the equilibrium is the competitive equilibrium, as both firms will be afraid of retaliation if they deviate from the competitive price.

Consider the Collusion of Mom Wakeboards and Pop Surfboards