Gary's Gas and Frank's Fuel are the only two providers of gasoline in their small town.Gary summarizes his pricing strategy as,"I'll do to Frank (price-wise)what Frank did to me last time." This is an example of:

Question

Quizplus · Accepted Answer

This is an example of a tit-for-tat strategy, where Gary is basing his pricing decisions on Frank's past actions. This can be a rational strategy in a duopoly market where there are only a few players and the actions of one player can have a significant impact on the other's profits.

Gary's Gas and Frank's Fuel Are the Only Two Providers