Two competing telecommunication firms, Alpha and Beta, are operating in a duopoly. They are deciding whether to set their monthly subscription rate at $50 or $30. Game theory can be used to analyse their strategic interactions. If a tacit collusion agreement between them breaks down, which of the options below represents the profits the firms will earn in the long-run?
| Firm Beta: $50 | Firm Beta: $30 | |
|---|---|---|
| Firm Alpha: $50 | Option A: $200m, $200m | Option B: $50m, $320m |
| Firm Alpha: $30 | Option C: $320m, $50m | Option D: $110m, $110m |
Option A ($200m, $200m)
Option B ($50m, $320m)
Option C ($320m, $50m)
Option D ($110m, $110m)
