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A cartel of four firms that controls 100 percent of the sales in a market, and faces the same cost schedules of a monopolist, will set a price somewhat lower than the monopoly price for its product.
Cartel
A formal agreement among firms (or countries) in an industry to set the price of a product and establish the outputs of the individual firms (or countries) or to divide the market for the product geographically.
Monopoly Price
The price set by a monopolist, which is typically higher than in competitive markets, reflecting the monopolist's market power and lack of competition.
- Ascertain situations conducive to collusion among oligopoly participants.
- Outline the variations in enterprise activities and market delineations contrasting collusive with non-collusive oligopolies.
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Learning Objectives
- Ascertain situations conducive to collusion among oligopoly participants.
- Outline the variations in enterprise activities and market delineations contrasting collusive with non-collusive oligopolies.
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