You are one of two member nations of OOEC: the Organization of Otter Exporting Countries, a cartel designed to artificially restrict otter output in an attempt to generate monopoly profits. Demand conditions are such that various combinations of output yield the profits in the payoff matrix. Other Country
Produce 1,000 Otters Produce 2,000 Otters
Your Country Produce 1,000 Otters $500, $500 $250, $700
Produce 2,000 Otters $700, $250 $400, $400
a. If your country can successfully collude with the other country, each country will produce otters, and each will earn in profit.
b. What is the equilibrium outcome in this game if it is only played once? Is the equilibrium outcome a good one for your country?