The incentive to cheat within a cartel increases with an increase in the following factors, except
A) the number of firms in the cartel.
B) economic performance and industry sales.
C) the number of potential entrants into the industry.
D) the cost differences among firms.

Question

Quizplus · Accepted Answer

Higher economic performance and industry sales will not necessarily increase the incentive to cheat within a cartel as firms may still benefit from the overall growth of the industry. However, the other factors listed, such as the number of firms in the cartel, the number of potential entrants, and cost differences among firms, can all increase the incentive to cheat in different ways.

The Incentive to Cheat Within a Cartel Increases with an Increase