Oligopolists may well be able to reach their preferred, cooperative outcome if
A)the number of oligopolists is large.
B)they learn that a Nash equilibrium is in their best long-term interests.
C)a sufficient number of firms can be persuaded to lower their prices.
D)the game they play is repeated a sufficient number of times.

Question

Quizplus · Accepted Answer

If the game is repeated a sufficient number of times, the oligopolists have the opportunity to learn from past interactions and establish a mutually beneficial cooperative outcome. This is because each firm will have an incentive to maintain a reputation for cooperation, as deviating from the cooperative outcome will result in lower profits in future interactions. Therefore, the repeated game can lead to a stable cooperative equilibrium in an oligopoly.

Oligopolists May Well Be Able to Reach Their Preferred, Cooperative