Reduce output and increase their prices and profits

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Reference no: EM131392024

Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable. Which of the following is a reason why cartels often break down?

A. Members of a cartel may resent having to share their profits equally.

B. Most cartels do not have a dominant strategy.

C. When a cartel is profitable the amount of competition is faces equally.

D. Each member of a cartel has an incentive to "chear" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement.

Reference no: EM131392024

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