Unformatted text preview: (just like a monopoly).
– The firms then split the monopoly level of profits among all the firms in the industry. When firms in an oligopoly cooperate, they collude. – When firms collude, they form a cartel.
– A cartel is a group of firms acting together to limit output, raise price and increase economic profit.
– Cartel’s are illegal, but some do operate in some industries.
– Cartel’s tend to break down: we saw this in our exercise.6 Actions for Firms: Cooperate
Actions for Firms: Cooperate So in summary: – Firms who cooperate lead to monopolist level prices and quantities in total.
– When looking at Oligopolies at a whole, this is the Pare...
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