In which of the following cartels is total cartel profit likely to be the highest?

Question

Quizplus · Accepted Answer

A cartel made up of identical firms each producing the same quantity of a homogeneous product is likely to have the highest total cartel profit because it eliminates price competition and maximizes the monopoly price. With identical firms producing the same quantity of a homogeneous product, there is no incentive for any one firm to cheat and produce more or charge a lower price, as they all have the same marginal cost and profit curve. Therefore, they can coordinate and maximize their profits as a group. In contrast, firms producing different quantities or differentiated products may have different marginal costs and profit curves, making it difficult for them to coordinate and maintain the agreed-upon price and output levels.

In Which of the Following Cartels Is Total Cartel Profit