Russia and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel for natural gas. The two strategies these countries face are to comply with the cartel agreement or to cheat on the cartel agreement
If both countries comply, the economic profit for each will be $140 million. If one country cheats, that country earns $200 million in economic profit and the other country will have an economic loss of $10 million. If all countries cheat, they break even. What is the outcome of this game if it is only played once? A) Each country will comply with the cartel agreement.
B) Two countries will comply and one will cheat, but we cannot predict which one will cheat.
C) One country will comply and two will cheat, but we cannot predict which ones will cheat.
D) None of the countries will comply with the cartel agreement.
D
You might also like to view...
Whether or not a separating equilibrium exists in a competitive market with adverse selection depends on what fraction of consumers is of the high cost type and what fraction is of the low cost type.
Answer the following statement true (T) or false (F)
What are natural experiments?
What will be an ideal response?
If the law of one price holds for a single good, then absolute PPP measured with price indexes will also hold
Indicate whether the statement is true or false
At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost
a. rises. b. remains unaffected. c. falls. d. All of the above are possible depending on the shape of the marginal cost curve.