In game theory, a credible threat of coercion by a dominant firm tends to

A) prevent cheating in collusive agreements.
B) increase the incentives to cheat.
C) reduce discipline among cartel members.
D) discourage collusive agreements.

Credible Threat

A promise of negative consequences that is believable and likely to influence behavior in strategic situations.

Collusive Agreements

Refers to arrangements between firms to limit competition, fix prices, or divide markets among themselves, often leading to higher prices for consumers.

Dominant Firm

A company with a major share of market sales, which has the power to influence market conditions and pricing.