question archive Describe several barriers (beyond antitrust laws) to collusion among oligopolists
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Describe several barriers (beyond antitrust laws) to collusion among oligopolists.
Apart from antitrust law barriers, there are several barriers that oligopolist faces during collusion, and some of them are as follows:
1. Cheating - There is always a fear that colluding members might cheat on each other to gain a higher profit.
2. Rise in the number of firms - When the number of firms in the oligopoly market rises then there is a lack of coordination among firms as more firms are forming cartels.
3. Restricted new entry- when there is existing collusion between different firms then it automatically removes the new entry of the organizations.
4. Differential cost - Different firms may face different costs due to differences in the internal factors; therefore, one price for all can be advantageous for one, but may not be for others which may lead to a cartel failure.