Consider a market with two firms managed by Harry and Vera. Under a cartel (both firms pick the high price), each firm earns a profit of $80. Under a duopoly (both firms pick the low price), each firm earns a profit of $60. If the two firms pick different prices, the high-price firm earns a profit of $20 and the low-price firm earns a profit of $90.
a. Fill in the following payoff matrix.
b. The outcome of the pricing game is that Harry picks the price and Vera picks the price.
c. The outcome identified in part (b) is a Nash equilibrium because neither firm has an incentive to_______.