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This 1 page Class Notes was uploaded by Taryn manciu on Sunday November 29, 2015. The Class Notes belongs to Econ201 at University of Oregon taught by Keaton Miller in Fall 2015. Since its upload, it has received 29 views.
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Date Created: 11/29/15
Week 9 Tuesday Grim trigger strategy continually setting high price then when other person sets low prices he will set lower price forever Titfortat start by cooperating and continue as long as the other person cooperates Cartels are more likely to work if Interaction is frequently repeated and participants care about the future The fewer the better If other players can quickly react information about what each player does goes back and forth quickly Cooperation more likely with favorable legal environment Mutually assured destruction results in a kind of stability Requires both to keep up in arms race If one is more powerful MAD can break down Requires rationality on both parts A useful theory for thinking about soviet US cold war interactions Not as useful for thinking about cartel Arms race analysis We see prisoner s dilemma where unique equilibrium is both chose arm If we could cooperate both would be better of is both disarm Try an arms control agreement Both parties can be better off but crucial for both sides to be able to verify compliance of the other party Demand for factors of production Consumer demand Firm supply Derived demand firms don t want labor for its own sake just want to make a pro t Need to know tech of firm input and output prices
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