Two Duopoly Firms That Sell an Identical Good Form a Cartel

question 193

Multiple Choice

Two duopoly firms that sell an identical good form a cartel. They decide to collude and fix the price of their good. In this prisoners' dilemma type situation, the likely outcome is

• A) both will cheat.
• B) neither one will cheat.
• C) only one will cheat.
• D) It is impossible to say.

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Definitions:

External Factors

External influences that can impact a business or system, including economic, social, political, and environmental conditions.

Marketing Environment

The external factors that affect a company's ability to engage and transact with its targeted customers, including social, economic, technological, competitive, and regulatory forces.

World Trade Organization

An international organization that regulates trade rules between nations to ensure trade flows smoothly, predictably, and as freely as possible.

Marrakech Agreement

An agreement that established the World Trade Organization (WTO), aimed at facilitating global trade.