The result of a prisoner’s dilemma in a duopoly is often that even though Firm A and Firm B could make the highest combined profits by cooperating, .

Firms in the oligopoly typically act more like competitors.

Explanation:

The result of a prisoner's dilemma in a duopoly is often that even though firm A and B could make the highest combined profits by cooperating, in producing lower level of output and act like a monopolist. The two firms end with an increasing output and earn only $400 in each profits.

Since the number of sellers in an oligopoly grows larger, the market looks like a competitive market. There are more chances to get incentive or cheat if the person or firm cooperated.

The prisoner's dilemma is a game that tells why cooperation is difficult to maintain for oligopolists. in this game the strategy of each actor is to defect.

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