Price collusion occurs in oligopolistic industries because price competition can lower revenue for all Sms price competition results in economies of scale. costs are similar among firms price competition results in diseconomies of scale b. Assess the economic desirability of collusive pricing Collusive pricing is not economically desirable from the oligopoly's viewpoint because it cannot control entry Collusive pricing is economically desirable from society's viewpoint because it is a capital drain Collusive pricing is not economically desirable from society's viewpoint because price equals average total cost Cousive pricing is economically desirable from the oligopoly's viewpoint because it results in monopoly profits. c. Price leadership is legal in the United States, whereas price-fixing is not. This is because price leadership is not an agreement, whereas price-fixing is. a registered arrangement subject to oversight, whereas price-fixing is not not a registered arrangement subject to oversight, whereas price-fixing is. an agreement, whereas price-fixing is not.
