Collusion is more difficult when there are many firms producing differentiated products because it's harder to agree on prices and monitor adherence to the agreement. In markets with fewer firms or more homogeneous products, collusion is easier to coordinate and enforce.

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Collusion

Question 19

Multiple Choice

Collusion

A) reduces market concentration in an industry.
B) is more difficult when there are many firms producing differentiated products in an industry.
C) among firms is difficult to maintain because it eliminates long run economic profit.
D) is rampant in perfect competition as all firms charge the same price.

Correct Answer: