It’s game theory, each company needs to stay ahead of the others and end up in a globally suboptimal state. One solution to the prisoners dilemma is “the don” who ensures nobody defects, aka the government.
Yes. Whether actual bullets are involved or means like imprisonment or fines, this literally is the solution to prisonner-dillemma's like problems, and in various forms exists everywhere and forms the underpinning of a civilized society.
