Why do firms in an oligopoly find it difficult to cooperate and not cheat on a cartel agreement?
What will be an ideal response?
Firms in an oligopoly have large market shares. When they change their output or price, the firm affects not only its own revenue and profit but also the revenue and profit of other firms. For example, if a firm cheats on a cartel agreement by lowering its price, it will capture a larger market share. The competitors' total revenue and profit decrease, but the cheating firm's profit increases. If the firms cooperate, they could act like a monopoly and have the maximum joint profit but each firm has the temptation to cheat and produce more than its share. This temptation is strong because cheating will increase the cheater's revenue and profit substantially.
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Retained earnings are corporate earnings that are paid as dividends to stockholders
Indicate whether the statement is true or false
The track record of foreign assistance
a. is not very clear. b. shows that it have been very successful in helping poor countries. c. has enhanced the protection of private property rights in less developed countries. d. has drastically reduced corruption in less developed countries. e. has made most economists skeptical.
Rank the price elasticities of the following goods in descending order (from highest to lowest)
a. chewing gum, sport shirt, 4-bedroom house b. 4-bedroom house, chewing gum, sport shirt c. chewing gum, 4-bedroom house, sport shirt d. 4-bedroom house, sport shirt, chewing gum e. sport shirt, chewing gum, 4-bedroom house
Suppose the domestic supply (QSU.S) and demand (QDU.S) for skateboards in the United States is represented by the following set of equations:QS = -60 + 3PQD = 390 - 2PIn the absence of international trade in skateboards, what will be the equilibrium price of skateboards in the United States?
A. $66 B. $150 C. $45 D. $90