One inherent factor that tends to destroy collusion among oligopolists is the
A) incentive to cheat.
B) product differentiation.
C) mutual interdependence.
D) leadership of the dominant firm.

Question

Quizplus · Accepted Answer

Oligopolists face the incentive to cheat on their agreed-upon price and output levels, as they can potentially increase their profits by lowering their price or increasing their production. This self-interest can undermine the stability of collusion, making it difficult for oligopolists to maintain an agreement over the long term. Therefore, the incentive to cheat can destroy collusion among oligopolists.

One Inherent Factor That Tends to Destroy Collusion Among Oligopolists