The price and quantity generated by a Nash equilibrium is closer to the competitive solution than the price and quantity generated by a cartel.

Question

Quizplus · Accepted Answer

In a Nash equilibrium, each player (or firm) is making the best decision given the decisions of all other players. This usually leads to a more efficient outcome in terms of economic welfare than a cartel, where firms collude and restrict output to maximize profits at the expense of consumers. Therefore, the price and quantity generated by a Nash equilibrium tends to be closer to the competitive solution than that generated by a cartel.

The Price and Quantity Generated by a Nash Equilibrium Is