Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include ____.
A) number and size distribution of sellers
B) size and frequency of orders
C) product heterogeneity
D) a and b only
E) a,b,and c

Question

Quizplus · Accepted Answer

The number and size distribution of sellers affect oligopolistic firms' ability to cooperate because a larger number of sellers or a more equal distribution of market share makes it more difficult to coordinate and enforce a cartel agreement. Size and frequency of orders can also affect cooperative behavior as it may be difficult for firms to monitor and enforce the agreement. Additionally, product heterogeneity creates a greater incentive for firms to deviate from the agreement as they may benefit more from producing and selling a slightly differentiated product.

Factors That Affect the Ability of Oligopolistic Firms to Successfully