What is the reason that oligopolists do not sign an enforceable agreement to cooperate rather than compete?

A. Lawyers are too expensive.
B. It would not help them.
C. Each company does not trust the other company.
D. It is illegal in the United States.

Question

16-07-2024
Business

Answered

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What is the reason that oligopolists do not sign an enforceable agreement to cooperate rather than compete?

A. Lawyers are too expensive.
B. It would not help them.
C. Each company does not trust the other company.
D. It is illegal in the United States.

Sagot :

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Final answer:

Oligopolists avoid signing enforceable cooperation agreements due to legal restrictions, coordination challenges, and trust issues among companies.

Explanation:

Oligopolists do not sign an enforceable agreement to cooperate rather than compete due to several reasons. First, it is illegal in the United States as antitrust laws prohibit collusion. Second, coordination among firms is difficult and can lead to the threat of defection and lack of trust among companies, making it challenging to maintain a cooperative agreement.

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