Apex Concrete and Crown Cement are the two dominant suppliers of industrial-grade cement in Westland. Following an investigation, the national competition authority fined both firms a combined total of €45 million for colluding to fix market prices. Evidence revealed that representatives from both companies held secret meetings to restrict regional supply and artificially inflate wholesale concrete prices.
Draw a simple two-firm, two-outcome game theory payoff matrix to show why Apex Concrete and Crown Cement had an incentive to collude.
92 exam-style questions on Edexcel A A Level Economics 3.4 Market structures, covering 3.4.1 Efficiency, 3.4.2 Perfect competition, 3.4.3 Monopolistic competition, 3.4.4 Oligopoly, 3.4.5 Monopoly, 3.4.6 Monopsony, and 3.4.7 Contestability. Each one has a worked solution and a mark scheme showing where the marks go.