Unformatted text preview: benefits a particular firm that currently has the competitive advantage, otherwise. When this fails to happen over a number of periods, it will leads firms into brutal competition over one to another (grim trigger strategy). 3. False. In one case, firms behave rationally in implementing price wars if their reason is to imply losses. Price wars become irrational if only one firm cheats, however it is a rational action to take as an intermediate solution for a low demand in the market, as long as firms will go back to collusive price after T period of time in price war....
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This note was uploaded on 04/20/2008 for the course ECON 340 taught by Professor Davis during the Spring '08 term at Wisc Stevens Point.
- Spring '08