Since firms face a more elastic demand curve than
does an industry the equilibrium forces inherent in the market economy would
tend to break any attempt to form a cartel. This is because: if a firm charges
a lower price than the cartel price the result would be a significant change in
the quantity demanded from the firm (drawing buyers industry-wide) and total
revenue would increase for the firm. The increased total revenue is an
irresistible incentive, enticing a firm to break the cartel.
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