Tacit collusion is most likely to occur if there are only a few firms in the industry.

Question

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When there are only a few firms in the industry, it is easier for them to communicate and coordinate their behavior in a way that limits competition and increases profits. This can lead to tacit collusion, where firms act in a way that is consistent with collusion without actually making a formal agreement. In contrast, in industries with many firms, it is more difficult to coordinate behavior and maintain collusion, making it less likely to occur.

Tacit Collusion Is Most Likely to Occur If There Are