Cartels are more likely to succeed the larger the number of firms in an industry.

Question

Quizplus · Accepted Answer

Cartels aim to reduce competition in an industry by colluding and setting prices and output levels. The larger the number of firms in an industry, the more difficult it is to coordinate and enforce cartel agreements, leading to a higher likelihood of cheating and noncompliance among members. Therefore, cartels are more likely to succeed in industries with fewer firms.

Cartels Are More Likely to Succeed the Larger the Number