The Prisoners Dilemma refers to a game theory payoff situation that can be applied to oligopoly whenn

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    no matter what strategy Firm 1 pursues, Firm 2 comes out ahead by competing aggressively, even when behaving cooperatively would result in higher profits.
     Both 1 and 3.
     cooperative behavior would result in lower profits and so firms compete aggressively until profits are zero.
     colluding to earn higher profits is illegal.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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no matter what strategy Firm 1 pursues, Firm 2 comes out ahead by competing aggressively, even when behaving cooperatively would result in higher profits.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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