Figure 8.9
-The incentive to charge a low price even though it leads to lower profits in Figure 8.9 is an example of

Question

Quizplus · Accepted Answer

The duopolists' dilemma refers to the situation where two competing firms have an incentive to collude and act as a cartel to maximize profits, but each firm also has an incentive to cheat and increase its own market share. In the case of Figure 8.9, both firms have an incentive to charge a low price to increase their market share, but this leads to lower profits for both firms.

Figure 8.9 -The Incentive to Charge a Low Price Even Though It