-Refer to Table 10 -4. Suppose pricing PlayStations is a repeated game in which Carrefour and LuLu will be selling the game system in competition over a long period of time. In this case, what is the most likely outcome?

Question

Quizplus · Accepted Answer

In a repeated game, firms have an incentive to cooperate to maximize their long-term profits. Charging the high price allows both firms to earn higher profits over time compared to the lower profits they would earn in a noncooperative equilibrium where both charge the low price.