Cooperation between Coke and Pepsi is difficult because each business can increase profits by:
A)producing less than the collusive quantity.
B)producing more than the quantity that maximizes joint profits.
C)charging less than the price that maximizes joint profits.
D)advertising more than will maximize joint profits.

Question

Quizplus · Accepted Answer

Producing more than the quantity that maximizes joint profits. This is because each business has an incentive to capture a larger share of the market and increase their own profits, even if it comes at the expense of the other business.

Cooperation Between Coke and Pepsi Is Difficult Because Each Business