If a duopoly collusive agreement is made that maximizes joint profit,
A)each of the duopolists has no incentive to cheat on the agreement.
B)each duopolist has the incentive to cheat on the duopoly agreement by lowering the price.
C)each duopolist has the incentive to cheat on the agreement by increasing the price to make monopoly profit.
D)there is no concern over the entrance of new firms because they cannot decrease the duopolists' profit.
E)the dominant strategy is to collude.

Question

Quizplus · Accepted Answer

In a duopoly collusive agreement, each firm has an incentive to cheat by lowering the price to increase its own profit, even though this may reduce joint profits.

If a Duopoly Collusive Agreement Is Made That Maximizes Joint