The duopoly price provides a greater incentive to maintain cartel pricing than does the grim trigger strategy.

Name: The duopoly price provides a greater incentive to maintain cartel pricing than does the grim trigger strategy.
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Question

Quizplus · Accepted Answer

The grim trigger strategy provides a greater incentive to maintain cartel pricing because it involves severe, long-lasting punishments for any firm that deviates from the agreed-upon prices, thereby deterring firms from breaking the cartel agreement.

The Duopoly Price Provides a Greater Incentive to Maintain Cartel