A successful and stable cartel can be established if there are
A)many firms producing a storable product.
B)many firms producing a perishable product.
C)a few firms producing a storable product.
D)a few firms producing a perishable product.

Question

Quizplus · Accepted Answer

A successful and stable cartel can be established more easily when there are a few firms producing a storable product. This is because storable products allow for price manipulation and control over the market as they can be withheld from the market to increase prices. In contrast, a perishable product needs to be sold quickly, so it is harder to control prices as the product needs to be sold in a timely manner. Additionally, having a few firms reduces the likelihood of cheating and makes it easier to coordinate their actions to maintain the cartel's power.

A Successful and Stable Cartel Can Be Established If There