The success of a cartel rests upon
A) inducing all members to limit their combined output and charge the same price.
B) inducing all members to differentiate their products and charge different prices.
C) making exit from the cartel as nearly costless as possible.
D) discouraging some firms in the market from joining.

Question

Quizplus · Accepted Answer

The success of a cartel lies in inducing all members to limit their combined output and charge the same price. If all members follow this tactic, the cartel can maintain high prices and limit competition, leading to increased profits for all members. However, if even one member cheats and increases their output or lowers their price, the cartel's stability can be threatened.

The Success of a Cartel Rests Upon