Cartels are difficult to maintain because
A)antitrust laws are difficult to enforce.
B)cartel agreements are conducive to monopoly outcomes.
C)there is always tension between cooperation and self-interest in a cartel.
D)firms pay little attention to the decisions made by other firms.

Question

Quizplus · Accepted Answer

Cartels involve a group of firms collaborating on setting prices, output levels, and other key business decisions. However, there is always tension between cooperation and self-interest in a cartel, as each firm may be trying to maximize its own profits rather than adhere to the agreed-upon set of rules. This makes it difficult to maintain a cartel for an extended period of time. Antitrust laws can help discourage cartel behavior, but they may be difficult to enforce in practice. While cartel agreements may lead to monopoly outcomes, this is not necessarily a factor that makes cartels difficult to maintain. Finally, firms in a cartel must pay close attention to the decisions made by other firms in order to effectively cooperate and maintain the cartel, so Option D is not correct.

Cartels Are Difficult to Maintain Because