Which of the following are conditions for successful collusion? 1.There are few firms in the industry.
2)Secret price cutting by individual members is detectable and punishable.
3)There exists a Nash equilibrium prior to the formation of a cartel.
A) All of these conditions.
B) Conditions 1 and 2 only.
C) Conditions 2 and 3 only.
D) Conditions 1 and 3 only.
E) Condition 2 only.

Question

Quizplus · Accepted Answer

Successful collusion is more likely when there are few firms (Condition 1) and when secret price cutting is detectable and punishable (Condition 2). A Nash equilibrium prior to cartel formation is not necessary for collusion.

Which of the Following Are Conditions for Successful Collusion? 1