An oligopolist that cheats on a collusive agreement by offering secret rebates will quickly be forced out of the industry by its competitors.

Question

Quizplus · Accepted Answer

While cheating on a collusive agreement may result in retaliation from other oligopolists, it is not necessarily true that the cheating firm will be forced out of the industry. Other strategies such as price cutting or intensified advertising may also be used to compete with the cheating firm.

An Oligopolist That Cheats on a Collusive Agreement by Offering