The reason most cartels end or cease to be effective is
A) enforcement of antitrust legislation.
B) the development of substitutes.
C) one of the member firms absorbs the other firms.
D) consumers discover the agreement and buy from other firms.
E) the incentive to cheat on the agreement.

Question

Quizplus · Accepted Answer

The incentive to cheat on the agreement can eventually lead to the breakdown of the cartel, as one or more firms may find it more profitable to break the agreement and increase their production or lower their prices. This can create a domino effect, with other firms following suit and leading to the cartel's collapse.

The Reason Most Cartels End or Cease to Be Effective