If new firms enter a cartel market, the probability that the cartel will survive _________ if the cartel________ .

Question

Quizplus · Accepted Answer

When new firms enter a cartel market, the concentration of the market is reduced, which makes collusion less effective. Therefore, the probability that the cartel will survive decreases. It doesn't matter whether the new firms are included or excluded from the agreement since their presence in the market still affects the concentration level.

If New Firms Enter a Cartel Market, the Probability That