Unformatted text preview: C. If the two stores are not purchased by another firm but instead meet to collude, what is the most likely outcome of this meeting? Typically firms would both agree to not expand since it would increase both of their profits. But in this specific case, if Super Duper were to not Expand and Ultimate Saver were to expand they would make a net profit of $300, which they could agree to split evenly and both companies would make $150 of profit each. This would be the most likely outcome since $150 > $85 or $135 which is the profit they would make had neither of them expanded....
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This note was uploaded on 02/08/2011 for the course ECONOMICS 101 taught by Professor June during the Spring '08 term at Rutgers.
- Spring '08