The avoidance of a worst case scenario strategy in a two-firm balanced oligopoly can best be described as a strategy
A) taken by the more powerful of the two firms, the other follows to avoid a worst case outcome
B) taken by the less powerful of the two firms in order to avoid a worst case outcome
C) that is best for the firm regardless of the strategy taken by its rival
D) that avoids a Nash equilibrium outcome
E) that allows both firms to obtain cartel-like profits

Question

Quizplus · Accepted Answer

The avoidance of a worst case scenario strategy in a two-firm balanced oligopoly is best described as a strategy that is best for the firm regardless of the strategy taken by its rival. This is because in a balanced oligopoly, both firms are of equal size and power, so neither firm can force the other to take a particular action. As a result, each firm must choose a strategy that is in its own best interests, regardless of what the other firm does.

The Avoidance of a Worst Case Scenario Strategy in a Two-Firm