Explain the general meaning of the following profit payoff matrix for oligopolists C and D. All profit figures are in thousands.
a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries.
b. Assuming no collusion between C and D, what is the likely pricing outcome?
c. In view of your answer to 6b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement?
