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Llanis Llanis
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6 years ago
If there are 2 identical firms in a market that choose the quantity they produce, total welfare is the highest when there is a cartel.
True or False? Provide an explanation.
Textbook 
Microeconomics

Microeconomics


Edition: 6th
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wrote...
6 years ago
False. A cartel acts like a "virtual" monopoly and thus produces the least output. Output is the greatest if the 2 firms act as a Stackelberg Oligopoly which is therefore preferred.
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