Which of the following attitudes will be held by a typical firm in a typical cartel?
A)If I alone cheat, I'm better off; if everyone cheats, I'm worse off.
B)I can never do better for myself than by following agreed-upon cartel policies.
C)If everyone cheats, I'm better off and so is everyone else in the cartel.
D)If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat.

Question

Quizplus · Accepted Answer

Cartels often face a dilemma where individual firms can benefit in the short term by cheating on the cartel agreements (e.g., by secretly lowering prices or increasing production beyond agreed limits) to capture a larger market share. However, if all firms cheat, the cartel collapses, leading to a price war that reduces profits for all. Thus, the attitude described in A captures the incentive to cheat for individual gain while recognizing the collective detriment if everyone cheats.

Which of the Following Attitudes Will Be Held by a Typical