Question

State how the cartel deal can succeed in the oligopoly market?

Answer 1

An oligopolic firm can join cartel for price fixing.they can work together for determine the level of output. If they produce undifferent products then demand will be very low. For example If all bike makers accept cartel deal then can produce very low amount of products and can make prices high.with the cartel deal they can preserve their product type by being very cheap. But this can be happen only when all bike companies will accept the cartel deal other wise the company who is not in deal will be monopolist by producing lower budget bikes.