An oligopolist that cheats on a collusive agreement by reducing price will quickly be forced out of the industry by its competitors.

Question

Quizplus · Accepted Answer

If an oligopolist cheats on a collusive agreement by reducing price, the other competitors may also lower their prices and engage in a price war. This can lead to lower profits for all firms in the industry but may not necessarily force the cheating firm out of the industry. In fact, the cheating firm may gain some market share if it can sustain the lower price point.

An Oligopolist That Cheats on a Collusive Agreement by Reducing