Monopolies increase their profits by reducing output. This causes price to rise while as the firm reduces output their marginal cost tends to fall. This creates a gap between price and marginal cost. How does this gap between price and marginal cost help explain why collusion between two (or more) firms is likely fail?

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19-06-2024
Business

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Monopolies increase their profits by reducing output. This causes price to rise while as the firm reduces output their marginal cost tends to fall. This creates a gap between price and marginal cost. How does this gap between price and marginal cost help explain why collusion between two (or more) firms is likely fail?

Sagot :

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