The price leader's _____ is defined as sufficient resources possessed to deter and combat defection.
A) capacity to collude
B) capacity to imitate
C) capacity to punish
D) capacity to compete

Question

The price leader's _____ is defined as sufficient resources possessed to deter and combat defection.
A) capacity to collude 
B) capacity to imitate 
C) capacity to punish 
D) capacity to compete

Quizplus · Accepted Answer

The capacity to punish refers to the ability of the price leader to have sufficient resources to deter potential defectors and to combat any actual defections from the agreed-upon price. This can include the ability to lower prices, increase advertising, or take other retaliatory actions to keep other firms from breaking the agreement.

The Price Leader's _____ Is Defined as Sufficient Resources Possessed