Enforcing a cartel agreement is: A. Difficult because firms in the cartel an inc

Question

Enforcing a cartel agreement is: A. Difficult because firms in the cartel an incentive to cheat on the agreement B. Best accomplished with an implicit contract detailing price,output,and the division of profit C. Best accomplished with an explicit contract detailing price,output,and the division of profit D. Difficult when there is only a few large firms making most of the economic profit Enforcing a cartel agreement is: A. Difficult because firms in the cartel an incentive to cheat on the agreement B. Best accomplished with an implicit contract detailing price,output,and the division of profit C. Best accomplished with an explicit contract detailing price,output,and the division of profit D. Difficult when there is only a few large firms making most of the economic profit A. Difficult because firms in the cartel an incentive to cheat on the agreement B. Best accomplished with an implicit contract detailing price,output,and the division of profit C. Best accomplished with an explicit contract detailing price,output,and the division of profit D. Difficult when there is only a few large firms making most of the economic profit

Explanation / Answer

A. Difficult because firms in the cartel an incentive to cheat on the agreement

Cartel refers to collective decision making by a group of firms with a view to avoiding competition and securing monopoly control of the market. Competing firms may reach a broad agreement on the pricing and output policy so that competition is avaoided and a sort of joint monopoly structure of the market emerges.

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