🔎 The Most Important Game for Oligopolies

This is a simplified version of the “Bertrand” oligopoly game,

Saudi Arabia is the Row Player
Iran is the Column Player

	Low Production	High Production
Low Production	$\text{SA} = \$50$, $\text{Ir} = \$50$	$\text{SA} = \$10$, $\underline{\boldsymbol{\text{Ir} = \$60}}$
High Production	$\underline{\boldsymbol{\text{SA} = \$60}}$, $\text{Ir} = \$10$	$\underline{\boldsymbol{\text{SA} = \$20}}$, $\underline{\boldsymbol{\text{Ir} = \$20}}$

How do SA and IR feel about this?

There is no way to prevent sovereign states from colluding, so SA, Ir and many other Petroleum Exporting Countries formed the “Organization of Petroleum Exporting Countries” known as OPEC. Because there is no sovereign entity to make this illegal, it is essentially legal for them to do this. Their goal is for both of them to do low production in order to keep the price of oil high. Historically, they have had some success with this, but only moderate success. As a result, oil prices have remained relatively moderate.