An Agreement Between the Dominant Firm and the Fringe Members

question 31

Multiple Choice

An agreement between the dominant firm and the fringe members to keep output low often breaks because:

• A)the fringe firms usually appropriate a larger share of the profits.
• B)the agreement is not self enforcing.
• C)the dominant firm usually appropriates a larger share of the profits.
• D)both have an incentive to charge a higher price for their output.