In a situation where both firms in a two-firm, balanced oligopoly choose to avoid the worst case scenario
A) both firms will end up in the worst case
B) both firms end up in a Nash equilibrium outcome
C) only one firm will survive
D) both firms end up charging different prices
E) both firms end up with different profit margins

Question

Quizplus · Accepted Answer

In a balanced oligopoly, when both firms aim to avoid the worst-case scenario, they typically make decisions that lead to a Nash equilibrium. This outcome is where neither firm has anything to gain by unilaterally changing its strategy, assuming the other firm's strategy remains unchanged. It's a stable state of mutual decision-making that avoids the worst-case scenario for both parties.

In a Situation Where Both Firms in a Two-Firm, Balanced