Cartels do not last because their members find them difficult to maintain since:
A) each of the member firms can attain lower costs outside the cartel.
B) each firm in the cartel can gain from secret price cuts.
C) all the firms prefer an expansion in industry supply.
D) all the firms face less elastic demand curves when outside the cartel.

Question

Quizplus · Accepted Answer

Cartels are difficult to maintain because individual firms have an incentive to secretly cut prices to increase their market share and profits, undermining the cartel's agreed-upon pricing.

Cartels Do Not Last Because Their Members Find Them Difficult