(Figure: Oligopoly Pricing Strategy in Wireless TV Market I) Use Figure: Oligopoly Pricing Strategy in Wireless TV Market I. If neither Spectrum nor Sling advertises, then without any collusion:

A)Spectrum will begin advertising to maximize profits.
B)Sling will begin advertising to maximize profits.
C)there will be no incentive for either Spectrum or Sling to begin advertising.
D)there is an incentive for both Spectrum and Sling to begin advertising.

Question

(Figure: Oligopoly Pricing Strategy in Wireless TV Market I) Use Figure: Oligopoly Pricing Strategy in Wireless TV Market I. If neither Spectrum nor Sling advertises, then without any collusion:
​
 
A)Spectrum will begin advertising to maximize profits. 
B)Sling will begin advertising to maximize profits. 
C)there will be no incentive for either Spectrum or Sling to begin advertising. 
D)there is an incentive for both Spectrum and Sling to begin advertising.

Quizplus · Accepted Answer

If neither Spectrum nor Sling advertises, they are both charging the same price and earning the same profits. Therefore, there is no incentive for either of them to start advertising and potentially disrupt this equilibrium.