Asked by Alexis Singleton on May 14, 2024
Verified
Obstacles to collusion among oligopolists include the following, except
A) demand and costs differences among firms.
B) long-lasting economic recession and poor industry performance.
C) potential new entrants into the market.
D) "gentlemen's agreements" among the firms.
Collusion
A non-competitive secret or illegal agreement between rivals that attempts to disrupt the market's equilibrium by influencing the market mechanism such as price or output of goods and services.
Economic Recession
A period of significant decline in total output, income, employment, and trade in an economy, usually lasting from six months to a year.
Gentlemen's Agreements
Informal, non-binding agreements based on trust, honor, and the integrity of the parties, without any written documentation.
- Examine the hurdles and impediments to achieving effective collusion within oligopolistic enterprises.
Verified Answer
KR
Kayla RamdatMay 15, 2024
Final Answer :
D
Explanation :
"Gentlemen's agreements" among firms are actually a form of collusion, not an obstacle to it. These informal agreements can facilitate collusion by setting prices or market shares among competitors.
Learning Objectives
- Examine the hurdles and impediments to achieving effective collusion within oligopolistic enterprises.