Improving understanding of collusion in intermediate microeconomics
Standard treatments of collusion in intermediate microeconomics textbooks frequently involve a Cournot duopoly facing linear demand with constant marginal costs of production. These presentations leave students with the misunderstanding that firms jointly behaving like a single-firm monopolist and profit maximising collusion are one and the same. We present a simple and effective way for improving student comprehension of collusion; this exercise results in collusion where the duopolists produce more total output than that of a monopolist while enjoying greater joint profits. The exercise can be used to clarify and lead to a better understanding of collusion and profit maximisation.
Year of publication: |
2011
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Authors: | Moore, Evan |
Published in: |
International Review of Economic Education. - Economics Network, University of Bristol. - Vol. 10.2011, 1, p. 3-13
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Publisher: |
Economics Network, University of Bristol |
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