In the Cournot model of oligopoly, when the interaction is not repeated, collusion is difficult to...

In the Cournot model of oligopoly, when the interaction is not repeated, collusion is difficult to sustain because

Group of answer choices

the collusive agreement must be approved by a regulator before the firms make their decisions.

the collusive agreement is not a Nash Equilibrium.

there are whistleblowers everywhere who keep the firms in check.

the collusive agreement generates lower profits than if the firms compete with each other.

Expert Solution

Correct answer: The collusive agreement is not a nash equilibrium

Reason: A collusive agreement is a mutually beneficial agreement, which is different from the nash equilibrium. It is difficult to sustain if players do not interact because at this strategy, each player has an incentive to cheat, which leads to deviation from the collusive agreement.

Rahul Sunny answered 2 years ago

When is the Stackelberg variant of oligopoly competition more appropriate than the standard Cournot model? Group...

When is the Stackelberg variant of oligopoly competition more appropriate than the standard Cournot model? Group of answer choices when the firms are trying to collude. when one firm makes its output decision before the others. whenever there are more than two firms. when all firms enter the market simultaneously.

Consider the equilibrium of the Cournot model of duopoly. a. Can the firms benefit from collusion...

Consider the equilibrium of the Cournot model of duopoly. a. Can the firms benefit from collusion in this instance if they happen to initially be at the intersection of the two reaction curves and the collusion is enforced? Explain your answer. b. Show that each firm has an incentive to break any collusive agreement. c. Has the experience of the international oil cartel, OPEC, supported your answers?

Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals...

Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals do not change their output based on the output that it produces. Illustration: A Cournot oligopoly has two firms, Y and Z. Y observes the market demand curve and the number of units that Z produces. It assumes that Z does not change its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits....

In the collusion game, we found that collusion was only sustainable in the infinite horizon repeated...

In the collusion game, we found that collusion was only sustainable in the infinite horizon repeated game. One Nash Equilbrium of that game can be found when all players play a “grim trigger” strategy, where they collude until an opponent chooses to compete, and then compete for all future rounds as a punishment. In such a game, if the one period bonus that comes from competing is low enough, firms always collude and the punishment is never triggered. However, let’s...

1)What is called Best Response or Reaction Function in the context of the Cournot Oligopoly model?...

1)What is called Best Response or Reaction Function in the context of the Cournot Oligopoly model? Given the market demand curve faced by the Stackelberg duopolies P = 120 – 0.5QD MCA = $20 QD = QA + QB MCB = $34 Where the leader firm is Firm A and the follower is Firm B Hints: TRB = P * QB MRB = ¶TRB / ¶QB a)Anticipating Firm B’s reaction to its output level, what is the output level Firm...

What is "tacit collusion" and explain how it relates to the concept of a repeated prisoner's...

What is "tacit collusion" and explain how it relates to the concept of a repeated prisoner's dilemma game?

In five hundred words: Explain the oligopoly problem , collusion strategy , Cartel with Examples and...

In five hundred words: Explain the oligopoly problem , collusion strategy , Cartel with Examples and the conditions on how can they earn higher profits.

1, What is collusion? why it's difficult to detect? 2. What are the signs that an...

1, What is collusion? why it's difficult to detect? 2. What are the signs that an employee is stealing? (red flags) Behavior and accounting 3. look for an article of accounting fraud or computer crime and summarize it. Use the internal control information to explain how they detected it??

10. Briefly differentiate between collusion among firms in an oligopoly and an actual cartel. 11. Give...

10. Briefly differentiate between collusion among firms in an oligopoly and an actual cartel. 11. Give a real world example of a duopoly and a cartel.

in Cournot Oligopoly, Each firm believes rivals will hold their output constant if it changes its...

in Cournot Oligopoly, Each firm believes rivals will hold their output constant if it changes its output. <- what does it mean by this ? can anyone explain in detail?

Question