You arc one of two member nations of OOEC: the Organization of Otter Exporting C
ID: 1208522 • Letter: Y
Question
You arc one of two member nations of OOEC: the Organization of Otter Exporting Countries, a cartel designed to artificially restrict otter output in an attempt to generate monopoly profits. Demand conditions are such that various combinations of output yield the profits in the payoff matrix below: If your country is able to successfully collude with the other country, how many otters will each country produce, and how much profit will each earn? What Is the equilibrium outcome in this game if it is only played once? Is this a Prisoner's Dilemma game? Why or why not?Explanation / Answer
a) Both of them will collude and end up with producing 2000 units. Since if they produce 1000 unit and other produce 1000 also both of them will get same profit that is $500. But if the other one produce 2000 unit he will end up with 700 unit and he will get $250. So both of them will produce 2000.
b) Yes this is a prisoners dillemma because botha of them have chance to get higher profit but since they do not know the move of other player they will play safe game and will be happy with relatively lower profit of $400.
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