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Prisoners'' dilemma

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In 1931, Pepsi was almost broke. The Great Depression hit it hard, and Coke had most of the duopoly market for soft drinks in the United States. Pepsi tried many things: marketing campaigns, label changes, and more. Then it came up with the idea of selling 12-ounce bottles for 5¢, which had been the 6-ounce price. Coke could have followed the price per unit down, but it didn't. Total soft drink demand increased, and Pepsi took a larger share of the demand. Why is the equilibrium of this game different from that of a prisoners' dilemma?

Reference no: EM13100846

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