ECON101 Lecture Notes - Lecture 29: Shapley Value, Nash Equilibrium, Repeated Game
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Concentration measures ie: 2 companies: subscription for music streaming. Suppose each rm charges a subscription rate of . 99. However these rms could charge a subscription rate of . 99. If they did, each would earn a pro t of m. If 1 rm charges . 99 and the other . 99, The rm charging . 99 earns m, the other rm earns m. Cooperative equilibrium: each rm charges . 99 (but it"s illegal for them to price x and explicitly cooperate) Cartel = several rms acting together like a monopolist. Players agree (sometimes illegally) to cooperate to max collective economic pro ts. (however, they will soon start producing more than agreed on) University of chicago - economics dept: used this result to clean that cartels are not stable. Response: suppose the fame is played more than once. Repeated games ie: suppose the game is played 4 times.