Title

Cartels and the Incentive to Cheat: Evidence From the Classroom

Document Type

Article

Publication Date

6-1-1994

Department

Political Science, International Development, and International Affairs

Abstract

The axiom of human nature alluded to by Stigler has led the demise of most cartel arrangements. It is well known that each cartel member has a tremendous incentive to cheat on production limits to maximize profits. However, if each member exceeds production limits, the price must fall and the cartel collapses. Much of what economists teach about cartels can be illustrated with a simple example familiar to all students-the curve on their midterm exam score. The purpose of this article is to illustrate several points about cartel behavior with the example of the curve on an ex

Publication Title

Journal of Economic Education

Volume

25

Issue

3

First Page

267

Last Page

269