Asked by Shubrenia Scott on Jun 13, 2024
Verified
Tacit collusion is difficult if:
A) there are many firms in the industry.
B) the firms in the industry are producing differentiated products.
C) firms have common interests.
D) the oligopolists are selling to many small firms.
Tacit Collusion
An agreement among competitors to act in a manner that increases profits without explicitly communicating or formalizing their actions as a pact.
Differentiated Products
Products that are similar but distinguished from each other by features, branding, quality, or other attributes.
- Assess the influence of both overt and covert collusion on pricing tactics and market performance.
- Ascertain the components that either facilitate or hinder collusion among firms in an oligopoly structure.
Verified Answer
PA
Phil Angelie NemenzoJun 18, 2024
Final Answer :
A
Explanation :
When there are many firms in the industry, it is difficult for them to reach an agreement and monitor each other's behavior, making tacit collusion unlikely. The more firms there are, the more difficult it becomes to coordinate actions and maintain an agreement.
Learning Objectives
- Assess the influence of both overt and covert collusion on pricing tactics and market performance.
- Ascertain the components that either facilitate or hinder collusion among firms in an oligopoly structure.