An Agreement Between Two Duopolists To Function As A Monopolist Usually Breaks Down Because

The assimilation of marginal social costs and marginal social yield leads to optimal production at point e of the graph at the price imposed by the State on the OP. This price, which corresponds to 32,105 $US in the model we calculate numerically, exceeds the total average cost of the company, which stands at 28,003 $US, which translates into an excess gain of $ 2390,986,000. Why should a properly regulated sector make excess profits? This is because there is only room for two companies in the sector and the optimal output of this sector is fortuitously a production for which the average total cost is lower than the market price. If a third company occurred, it and the two original companies would suffer all the losses. A group of enterprises that have entered into a formal agreement to produce monopoly production and sell it at the monopoly price is called a cartel. . . .