Question

What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits? T T T 쫓 Paragraph v/ Arial 3(12pt) -·-·T·ノ·e ﹀ vt

Answer 1

1.

Oligopolists can work as a cartel, but they never trust each other. So, even if they are in a cartel, there never raise the price and behave like a monopoly and earn higher profit. Here, if one firm in oligopoly increases the price to get higher price and earn higher profit, then other oligopolist firms don't respond and don't increase the price. It makes the loss to the firm that has raised the price and their customers go to other firms. It is the reason that no any oligopolist firm wants to raise the price and try to increase profitability, as it backfires and profit decreases rather going to increase. So, oligopolist firms don't act like a monopolist.

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