Discuss three challenges that oligopolistic firms face in having a successful cartel.

Question

Question

business economics

Answer 1

Answer #1

Three challenges are -

1 - The firms often engage in cheating upon the cartel agreement in order to earn more profits by going beyond the output level set by contract

2 - The firms may later not agree upon the same price if they do not find the adequate profits in the cartel agreement

3 - Lack of trust and coordination often leads to managerial inefficiencies

Answer 2

Similar Homework Help Questions

In the Cartel model of oligopoly, Firms participating in the cartel make similar, but differentiated products...

In the Cartel model of oligopoly, Firms participating in the cartel make similar, but differentiated products Firms participating in the cartel have incentives to produce less than their agreed upon shares in order to charge higher prices for their product Firms participating in the cartel set their own prices based on the demand they face. Firms participating in the cartel agree to set their own production based on agreed upon market shares.
please answer all questions! In order to be successful, what must a cartel do? They must...

please answer all questions! In order to be successful, what must a cartel do? They must find a way to encourage their members to produce more than they would otherwise produce. They must agree on the total level of production for the cartel, but they need not agree on the amount produced by each member. They must agree on the total level of production and on the amount produced by each member. They must agree on the prices charged by...
*Explain why oligopolistic firms want to collude instead of competing. Discuss the potential negative effects of collu...

*Explain why oligopolistic firms want to collude instead of competing. Discuss the potential negative effects of collusion in the economy.

Describe and discuss at least three challenges that supervisors face in being effective project managers at Global Green Books Publishing. Identify and discuss at least three key skills/competencies s...

Describe and discuss at least three challenges that supervisors face in being effective project managers at Global Green Books Publishing. Identify and discuss at least three key skills/competencies supervisors need to be effective project managers at Global Green Books Publishing. Describe at least three challenges that team members face when working on projects at Global Green Books Publishing. Identify and discuss at least three skills/competencies that team members need in order to be effective in projects at Global Green Books...
Discuss three major cultural challenges that a company outside the Caribbean Region would face when entering...

Discuss three major cultural challenges that a company outside the Caribbean Region would face when entering the Caribbean market using Hofstede's five cultural dimensions analysis model? Please note this topic area in International Business. I was not able to select this Subject area below so I decided to write it here and click Economics.
4. Discuss some of the challenges marketers face with pricing new products.

4. Discuss some of the challenges marketers face with pricing new products.

Describe 3 challenges Caribbean firms face trying to develop export markets using eCommerce and briefly explain...

Describe 3 challenges Caribbean firms face trying to develop export markets using eCommerce and briefly explain strategies that they have used to overcome these challenges. (10 marks)
Discuss some of the challenges IT managers face when supporting innovation (McKeen & Smith)

Discuss some of the challenges IT managers face when supporting innovation (McKeen & Smith)
is din incent d. Oligopolistic firms earn profits in the long run only if there are...

is din incent d. Oligopolistic firms earn profits in the long run only if there are significant barriers to entry e. Three examples of entry barriers that firms with market power can create are and G

1. Discuss at least four challenges that a restaurant may face in the early period of...

1. Discuss at least four challenges that a restaurant may face in the early period of expansion globally.