A-LevelEconomicsMarket StructuresOct/Nov 2017Paper 3 Q131 Mark
Firm X is considering whether to co-operate with its rival so that their joint profit is $4000 a month ($2000 each). It calculated that, if it did not co-operate, its own profit would be $2800 a month provided it kept all its customers itself. However, if its rival undercut X's price and took some of X's customers then X's profit would be $1200. It has no knowledge of what the rival's policy will be. What describes the situation that the firm is facing?
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