In the prisoner's dilemma, it's also in the individual's best interest to betray the others, despite ultimately that leading to a worse outcome for everyone.
Yes but I'm addressing the OC as he specifically says that they have to charge more as if they're recouping losses. I'm trying to make the case that no losses are actually being made.
I'm saying isostatic may still be right, even with your objection.
Everyone can be having losses due to advertising (and be forced to charge more), despite advertising still being profitable for any particular business, compared to not advertising.
Tesco spend say 2% to try to get people to spend money there rather than ASDA.
ASDA spend 2% to try to get people to spend there rather than Tesco
Net result - both stores have no change in customer numbers, but an increase in overheads. Therefore they have to charge the customer more to make the same profit.