Cartels and collusion are more common in oligopolistic industries because:
A)products are differentiated.
B)there are no barriers to entry and exit.
C)there are a smaller number of firms.
D)the market demand curve is horizontal.

Question

Quizplus · Accepted Answer

Oligopolistic industries have a smaller number of firms, which increases the likelihood of collusion and cartel behavior. This is because the actions of each firm have a significant impact on the market outcomes and profits of all firms, and it is easier for a limited number of firms to coordinate and reach agreements. Additionally, oligopolies often have high barriers to entry, which reduces the threat of new competition disrupting the cartel's power. The differentiation of products, the nature of market demand curves, and the presence or absence of barriers to entry and exit can all be factors that influence the likelihood of collusion and cartel behavior, but a smaller number of firms is the most fundamental reason.

Cartels and Collusion Are More Common in Oligopolistic Industries Because