Apex Concrete and Crown Cement are the two dominant suppliers of industrial-grade cement in Westland. Following an investigation, the national competition authority fined both firms a combined total of €45 million for colluding to fix market prices. Evidence revealed that representatives from both companies held secret meetings to restrict regional supply and artificially inflate wholesale concrete prices.
Draw a simple two-firm, two-outcome game theory payoff matrix to show why Apex Concrete and Crown Cement had an incentive to collude.
