When more firms enter into a market that was previously characterized as a duopoly,it will
A) be easier for firms in the market to form a successful cartel.
B) be more difficult for firms in the market to form a successful cartel.
C) be just as difficult for firms in the market to form a successful cartel as it was before the new firms entered.
D) be impossible for firms in the market to form a successful cartel,whereas before the new firms entered,it would have been possible.
E) still be impossible for firms in the market to form a successful cartel.

Question

Quizplus · Accepted Answer

In a duopoly, it is easier for the firms to coordinate and form a cartel due to the few firms involved. However, when more firms enter, it becomes more difficult to coordinate and reach an agreement on prices and output. Therefore, it will be more difficult for firms in the market to form a successful cartel.

When More Firms Enter into a Market That Was Previously