Collusion Can Earn Higher Prices and Higher Profits Under the Bertrand

question 61

Multiple Choice

Collusion can earn higher prices and higher profits under the Bertrand model, but why is this an unlikely outcome in practice?

• A) Firms prefer to remain independent of other firms so that their pricing plans can be more flexible over time.
• B) The collusive firms have an incentive to gain market share at the expense of the other firms by cutting prices.
• C) The federal antitrust authorities have an easier time catching firms that collude on price rather than quantity.
• D) none of the above

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Goal-Setting Theory

A psychological theory that suggests specific and challenging goals along with appropriate feedback contribute to higher and better task performance.

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