Explain How Collusion Makes Firms Better Off

question 127

Essay

Explain how collusion makes firms better off.Given the incentives to collude, briefly explain why every industry does not become a cartel.

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Definitions:

NPV Projects

Projects assessed using Net Present Value, a method that calculates the difference between the present value of cash inflows and outflows over a period of time to evaluate and compare investments.

Distributions

In finance, distributions refer to payments made by various entities, such as mutual funds or investments, to shareholders or partners.

Shareholders

Individuals or entities that own shares in a corporation, entitling them to a portion of the company's profits and assets.