1. Explicit collusion by membe
1. Explicit collusion by members of acartel is illegal in the United States and many other countries.Nonetheless, cartels do manage to form and, in some cases, persistfor extended periods. Can you identify actions cartel members couldtake that might help them coordinate their actions but stop shortof explicit agreements?
2. List five examples of markets that youwould consider to be oligopolies (a few firms engaged in strategiccompetition). For each example, explain whether you think themarket is an example of Cournot or Bertrand competition (orneither).
3. Discuss why product differentiation isan important feature of many oligopoly markets. What is the effectof increased differentiation on the profitability of the firms inthe market?
Please answer all the three questions by oneparagraph for each in one posting.
Answer:
Solution:
1. when Cartel is operating its true that it will benefit allthe members of the cartel is true. but its also true that itsdifficult to balance individual interest when setting up thecartel. and also more difficult to monitor the individual memberswont cheat. Thus for that what incentive is to use the cartel toraise general prices and reduce over production which formation ofcartel,
2. Formation of cartel, stackalberg duopoly, cournot , betrandmodel of competetion
Pepsi and cocoa-cola ( carbonated beverages), toothpastes,automobiles, coffee. under this carbonated beverages , toothpasteare the examples of Bertrand model of competition.
3. Product differentiation is a situation when monopolistcharges different producers under monopolistic competition, try todifferntiate their products in terms of its shape, size packaging,trademark or brand name. this product differentiation is done toattract buyers from the rival firms in the market.
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