Why do most collusive agreements have difficulty surviving?

What will be an ideal response?


Most collusive agreements have difficulty surviving because each firm individually can increase its profits by lowering its price and increasing its output. Because of this fact, the incentive to cheat on the agreement is great for all firms.

Economics

You might also like to view...

Moving along the inelastic portion of a demand curve, a large percentage change in price leads to a smaller percentage change in quantity demanded

a. True b. False Indicate whether the statement is true or false

Economics

In economics, another term for satisfaction is

A) scarcity. B) need. C) utility. D) return.

Economics

Refer to the data provided in Table 9.1 below to answer the question(s) that follow.   Table 9.1 Refer to Table 9.1. If the market price is $17, then in the short run the firm will

A. operate and expand. B. operate but not expand. C. shut down, but not go out of business. D. go out of business.

Economics

Over the period from 1971 to 2012, the U.S. Gini ratio for household income ________, which means income inequality in the United States ________

A) increased; increased B) increased; decreased C) decreased; increased D) decreased; decreased

Economics