If a duopoly collusive agreement is made that maximizes joint profit,
A)each of the duopolists has no incentive to cheat on the agreement.
B)each duopolist has the incentive to cheat on the duopoly agreement by lowering the price.
C)each duopolist has the incentive to cheat on the agreement by increasing the price to make monopoly profit.
D)there is no concern over the entrance of potential rivals, since they cannot decrease the duopolists' profit.
E)the dominant strategy is to collude.

Question

Quizplus · Accepted Answer

In a collusive agreement, each duopolist has an incentive to cheat by lowering the price to increase their individual profit, even though it may reduce joint profit.

If a Duopoly Collusive Agreement Is Made That Maximizes Joint