The National Hockey League locked out the hockey players in an effort to negotiate a salary cap with the players' union. A cap would limit the payroll of each team. League officials acknowledged that the teams have brought the problem on themselves by overspending and overpaying some players in an effort to compete for the best players. Why would the teams have caused this problem for themselves?
A) They used explicit collusion instead of implicit collusion.
B) They tried to create a contestable market and now suffer because there are no barriers to entry.
C) They were caught in the logic of the prisoner's dilemma in which each player maximizing his own self-interest leads to an outcome that is worse off for everyone.
D) They tried to create a cartel and suffered the consequences of too much collusion.
Correct Answer:
Verified
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