How the detergent cartel would set price and output

Reference no: EM1376295

Proctor and Gamble (P&G) and the Lever Co. decide to form a laundry detergent cartel for future sales in Europe. Lever is more efficient than P&G.

a) illustrate graphically how the detergent cartel would set price and output.

b) Do you think this laundry detergent cartel with P&G and Lever will be stable for the next 5 years?

c)In March 2014 the Purex Chemical Co. Decides to enter the laundry detergent the market in Europe and is invited to join the Cartel.

How would this very efficient new producer affect the European Cartel agreement? Modify your graph to show the change. Explain

Reference no: EM1376295

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