Author Question: Suppose there are only five construction companies in a particular region that are each large enough ... (Read 10 times)

dekbert · **on:** Oct 12, 2022

Question 1

Assume the world's largest smart-phone producers (Apple, Nokia, Samsung, etc.) operate in an oligopolistic industry. In the long run, which of the following is the most important form of competition between these firms?
◦ predatory pricing
◦ product innovation
◦ brand proliferation
◦ advertising
◦ tacit collusion

Question 2

Suppose there are only five construction companies in a particular region that are each large enough to take on large public infrastructure projects (roads, bridges, sewers, etc.). Representatives of these companies meet regularly for coffee or on the golf course and agree on which company will submit the lowest bid for a particular project. This type of firm behaviour is an example of
◦ predatory pricing, and is meant to prevent new entrance to the industry.
◦ cooperative behaviour that results in increased consumer welfare.
◦ cooperative behaviour that results in higher output and lower prices.
◦ tacit collusion, and is legal as long as output is not restricted.
◦ explicit collusion and is illegal.

3ginamay · **Reply #1 on:** Oct 12, 2022

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