Express the critical discount factor as a function

Reference no: EM132200759

Question: Now change this game so that there are N 2 firms in the metrology tools market. If they all charge the same price, each will sell a proportion 1/N of the market demand at that price. Express the critical discount factor (required to obtain an equilibrium in the infinitely repeated game) as a function of N. Does your answer suggest that it will be easier to sustain cooperation when N is small or when N is large? What is the intuition behind this result?

Reference no: EM132200759

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