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Companies and Cartels

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Considering companies operate in their own self interest, should cartels be legal? Defend your position using economic principles. Are there economic policies available to break a cartel? If so, what are they?

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Solution Summary

The expert considers companies operating in their own self interest and determines if cartels should be legal. Economics principles are used to defend the position taken.

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Cartels should not be legal because a cartel is not efficient.

Because firm(s) face a downward sloping demand curve, increase in output will reduce price, and hence will not always increase revenue. If firms collude, they will jointly produce an output level which is optimal for ...

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