Why are cartels unstable it is that makes cartels unstable

Reference no: EM133341682

Question: Why are cartels unstable? It is that makes cartels unstable. When the cartel is working and the price is high, each cartel member has an incentive to undercut the market price to sell extra output in excess of its quota - which is referred to as cheating. if cheaters are not readily detected, other cartel members also undercut the price and start producing more; . once everybody starts producing more, output is back at the competitive level as well as the price and the cartel is over.

Reference no: EM133341682

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