There Is a Strong Tendency for Oligopolists to Cheat on Collusive

question 52

Multiple Choice

There is a strong tendency for oligopolists to cheat on collusive agreements because

• A) effective collusion rarely benefits any individual firm.
• B) a cheater can benefit both when all the other parties abide by the agreement and when other parties also cheat.
• C) when all firms abide by the agreement, the aggregate profits are reduced.
• D) collusion is a form of marginal cost pricing, whereas most firms benefit when price is above marginal cost.
• E) cheating is generally at the expense of the buyer and not the colluding sellers.

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