Suppose tuition fees for a university increase from £3,000 to £9,000. After the increase, enrolment drops by 5%. e) Explain why setting up a cartel and maintaining collusion may be difficult in general. f) Explain how a maximum tuition fee of £9000 imposed by the government may facilitate collusion between universities.
Suppose tuition fees for a university increase from £3,000 to £9,000. After the increase, enrolment drops by 5%. e) Explain why setting up a cartel and maintaining collusion may be difficult in general. f) Explain how a maximum tuition fee of £9000 imposed by the government may facilitate collusion between universities.
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
Problem 3P
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Question
Suppose tuition fees for a university increase from £3,000 to £9,000. After
the increase, enrolment drops by 5%.
e) Explain why setting up a cartel and maintaining collusion may be difficult
in general.
f) Explain how a maximum tuition fee of £9000 imposed by the government
may facilitate collusion between universities.
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