A 2006 paper by Margeret Levenstein and Valerie Suslow (“Wha…
A 2006 paper by Margeret Levenstein and Valerie Suslow (“What Determines Cartel Success?”) found that the following causes are common reasons why cartels break down: entering firms, the nature of the demand curve, growth of the industry, and bargaining difficulties. What other cause is also associated with bargaining difficulties?
Read DetailsFigure: Cartel SalesFive firms in an industry have equal and…
Figure: Cartel SalesFive firms in an industry have equal and constant marginal costs and act as a cartel, with each firm agreeing to charge a price of $9. If they each sell an equal quantity of output, what revenue will each firm earn?
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