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

A game where only one player has a dominant strategy

A game where neither player has a dominant strategy

A game where one player has two dominant strategies

A game where the combined payoff for the two players is the same with every possible combination of strategies

There might be inefficiency in production

There might be inefficiency in consumption

It might be possible to make one person better off without making another person worse off

There might be considerable inequality of income among the country’s citizens

It means that a market economy will fail to secure economic efficiency

It means that a market economy will fail to secure Pareto-efficiency

It means that a market economy will fail to secure productive efficiency

It means that a market economy will fail to secure technical efficiency