The fact that the price effect for an oligopolist is less than the price effect for a monopolist helps explain why firms are likely to cheat on a cartel agreement.

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Oligopolists have some market power, but not as much as a monopolist. This means that if an oligopolist raises their price, they will lose some customers to their competitors who will offer a lower price. However, if a monopolist raises their price, there are no close competitors to turn to, so the monopolist can make more profit. Since the price effect for an oligopolist is less than that of a monopolist, this means that oligopolists have less to gain from participating in a cartel agreement and are more likely to cheat in order to increase their profits.

The Fact That the Price Effect for an Oligopolist Is