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Even When Allowed to Collude, Firms in an Oligopoly Will

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Essay

Even when allowed to collude, firms in an oligopoly will choose to cheat on their agreements with the rest of the cartel. Why?


Definitions:

Net Seller

An entity or individual that sells more of a security, commodity, or product than is purchased over a specific time period.

Inferior Good

A category of products whose demand diminishes when consumer income rises, in opposition to normal goods.

Wage Rate

The fixed amount of compensation or payment provided to an employee by an employer in return for work performed, typically expressed per hour or year.

Utility Maximizer

An individual or entity that seeks to achieve the highest level of satisfaction possible from their consumption choices, given their resources.

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