A situation where each player adopts their dominant strategy

A situation where each player adopts the best strategy for them, given the strategy adopted by the other

A situation where the combined payoffs of the players is the maximum possible

The outcome that will arise in a game

A game where neither player has a dominant strategy

A game where each player would have a better payoff if each adopted their non-dominant strategy rather than their dominant strategy

A game where there is no Nash equilibrium

A game which applies only to prisoners

If their industry has very few firms

If entry to their industry is particularly hard

If the firms produce strongly differentiated products

If demand and input prices are fairly stable

Each firm may benefit if it alone cheats

If two firms repeat their game a known number of times, then threats of punishment will not deter cheating

If two firms repeat their game an unknown number of times, then threats of punishment may deter cheating

With a tit-for-tat strategy, if one firm cheats in one period, the other firm refuses to cooperate indefinitely

Price leadership is a form of tacit collusion

With dominant price leadership, the leader in an industry is the biggest firm

With barometric price leadership, the leader may change even if the relative size of each firm stays the same.

Price leadership breaks down if input prices or demand conditions change