A-level Paper 1, June 2022Markets and Business Behaviour
A-level Paper 1, June 2022, Q4(a)
Draw a simple two firm/two outcome game theory model to show why the chicken suppliers may have colluded.
Short answerDraw4 marks
Context
Pilgrim’s Pride is the second-largest chicken supplier in the US. It will pay a $107.9 million fine for price fixing with Tyson Foods and other chicken suppliers. The firms limited production to force prices higher and harm major customers, including KFC. Pilgrim’s Pride is thought to have gained at least $361 million in total revenue from the collusion.
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