362PART FIVEFIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRYThroughout the era of the Cold War, the United States and the Soviet Unionattempted to solve this problem through negotiation and agreements over armscontrol. The problems that the two countries faced were similar to those that oli-gopolists encounter in trying to maintain a cartel. Just as oligopolists argue overproduction levels, the United States and the Soviet Union argued over the amountof arms that each country would be allowed. And just as cartels have trouble en-forcing production levels, the United States and the Soviet Union each feared thatthe other country would cheat on any agreement. In both arms races and oligopo-lies, the relentless logic of self-interest drives the participants toward a noncoop-erative outcome that is worse for each party.Adver tisingWhen two firms advertise to attract the same customers, theyface a problem similar to the prisoners’ dilemma. For example, consider the deci-sions facing two cigarette companies, Marlboro and Camel. If neither company ad-
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