Question

Suppose that a firm's self-interested owners or managers have no moral or ethical qualms and do not anticipate being caught if they agree to participate in a collusive conspiracy. Why might they still decide not to do so if only a moderate revenue gain would result? (Hint: How would engaging in the collusion techniques listed in Figure $27-4$affect a conspiring firm's total costs?)

Short answer

Collusion happens within about an industry inside the science of economics and market competition when competing firms collaborate for mutual benefit. This is the basis for Smith's thorough overview of the importance of the self in economics.

Step-by-step solution

Introduction.

The concept of identity owners comes from the idea that when stakeholders act or interact in self-interested ways, unintended subsequently results for society as a whole occur.

This is the foundation of Smith's overarching explanation of the significance of self in economics.

Ethical qualms.

A twinge or sudden feeling of dread as well as unease, especially regarding human morality; compunction.

A collusive plot.

Collusion occurs within an industry as in study of finance and market competition when rival companies collaborate for mutual benefit. Conspiracy is typically defined as a contractual between two or more resellers to take any action to suppress seller competitive market.