In the Previous Chapter You Learned About Why Cartels Are

In the previous chapter you learned about why cartels are hard to maintain since cheating is a dominant strategy for all firms involved. If this table represents the payoffs for two firms operating as a cartel, are there any Nash equilibria in this coordination game? If so, how many? For these payoffs, what is the "best" equilibrium outcome for both firms? Which outcome is likely to occur in the market? Does your answer change if these firms can communicate and/or monitor each other easily? Explain. $\begin{array}{|l|l|l|}\hline & \text { Firm 1 Cheats } & \text { Firm 1 Doesn't Cheat } \\\hline \text { Firm 2 Cheats } & \text { Firm 1 earns: } & \text { Firm 1 earns: } \\\hline & \$ 4,000 & \$ 2,000 \\\hline & \text { Firm 2 earns: } & \text { Firm 2 earns: } \\\hline & \$ 4,000 & \$ 8,000 \\\hline \text { Firm 2 Doesn't Cheat } & \text { Firm 1 earns: } & \text { Firm 1 earns: } \\\hline & \$ 8,000 & \$ 6,000 \\\hline & \text { Firm } 2 \text { earns: } & \text { Firm 2 earns: } \\\hline & \$ 2,000 & \$ 6,000 \\\hline & & \\\hline\end{array}$