Consider a market with a duopolist structure. Each firm has similar marginal costs. Based on this information, we can conclude that: ProfitsDeceit > ProfitsCollusion > ProfitsDuopoly > ProfitsTrust in collusion ProfitsDeceit > ProfitsDuopoly > ProfitsCollusion > ProfitsTrust in collusion ProfitsDeceit > ProfitsTrust in collusion > ProfitsDuopoly > ProfitsCollusion ProfitsCollusion > ProfitsDuopoly > ProfitsDeceit > ProfitsTrust in collusion

In the Cournot duopoly model, both firms determine the profit-maximizing quantity simultaneously. The duopoly firms collude and form a monopoly to restrict quantity and increase price, which will earn the cartel monopoly profits greater than duopoly. in the long run, a trust in collusion will decrease the monopoly profits in the long run, however, in a cartel, each firm will have an incentive to cheat on their quota. If a single firm cheats on the cartel agreement then the single firm will earn greater increase in its profit. ProfitsDeceit > ProfitsCollusion > ProfitsDuopoly > ProfitsTrust in collusion

Answered: Consider a market with a duopolist…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a market with a duopolist structure. Each firm has similar marginal costs. Based on this information, we can conclude that:

		Profits^Deceit > Profits^Collusion > Profits^Duopoly > Profits^{Trust in collusion}
		Profits^Deceit > Profits^Duopoly > Profits^Collusion > Profits^{Trust in collusion}
		Profits^Deceit > Profits^{Trust in collusion} > Profits^Duopoly > Profits^Collusion
		Profits^Collusion > Profits^Duopoly > Profits^Deceit > Profits^{Trust in collusion}

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