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Explain why the payoff matrix in Problem indicates that firms A and B face the prisoners' dilemma.

Problem states: from the following payoff matrix, where the payoffs are the profits or lesses of the two firms, determine (a) whether firm A has a dominant strategy, (b) whether firm B has a dominant strategy, and (c) the optimal strategy for each firm

firm B

Low Price High Price

Low Price (1,1) (3, 21)

Firm A High Price (21,3) (2,2)

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9474881

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