__________ have a greater incentive to collude and to form cartels in an effort to achieve monopoly-like profits.

Question

Quizplus · Accepted Answer

Oligopolists have a greater incentive to collude and form cartels because they are in a market with few competitors and therefore have more market power to influence prices and profits. In contrast, firms in perfectly competitive markets have no incentive to collude because they are price takers and cannot influence market prices. Monopolists also have less incentive to collude because they already have a monopoly and do not need to collude to increase their market power. Monopolistic competitors do not have much incentive to collude because they are similar to oligopolies but with more competitors, so they have less market power. Similarly, workers in a competitive labor market do not have much incentive to collude because they are in a market with many competitors, and therefore cannot exert much market power over wages.

__________ Have a Greater Incentive to Collude and to Form