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Greetings,


Please see the payoff matrix below. The question is "explain how a trigger strategy

would be used to enforce the collusive outcome."


I'm having trouble understanding this question. I believe both firms would only play at nash equilibrium... but am not sure if I'm correct.


Any help is greatly appreciated. Thank you.



Problem.jpg

Problem.jpg

This is the payoff matrix of a game played by two firms who have
to choose between whether to advertise or not advertise
Firm B
Strategy
Advertise
Don't Advertise
Firm A
Advertise
4. 4
20. 1
Don't
1, 20
10. 10
Advertise

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