private colleges of the same caliber generally charge roughly the same tuition.

Question

private colleges of the same caliber generally charge roughly the same tuition. Would you characterize these colleges as a cartel type of oligopoly?Explain your answer. private colleges of the same caliber generally charge roughly the same tuition. Would you characterize these colleges as a cartel type of oligopoly?Explain your answer. private colleges of the same caliber generally charge roughly the same tuition. Would you characterize these colleges as a cartel type of oligopoly?Explain your answer.

Explanation / Answer

An oligopoly market is a market where there are few number of producers . Here the producers are private colleges . A cartel is a special case of oligopoly where producers collude to fix market prices and output decisions . The main goal of a cartel is profit maximization . Firms form a cartel to restrict output and increase prices in the market .

But in this case private colleges charging same tuition fees , is not a cartel . Yes this might be an oligopoly market due to existence of fewer number of private colleges . But every college tries to provide best education at lowest possible price in order to attract more students . This is an example of market competition that keeps tuition fees same in all colleges . If one college charges higher tuition students would opt for another which charges relatively lower tution .

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