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39
Another problem with Gentlemen's agreements and Pooling arrangements is the entry of new firms into the market. How does entry effect existing colluding firms?
A new firm will charge less and earn a short-run profit until the other firms become competitive again out of necessity.
Flashcard info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 12.10.2010