Under what conditions will the oligopolists agree to co-operate in their decisions

maximize their profits, could earn more by cheating. If everyone is cheating the co-operation agreement breaks down as profits fall to 0.

1. Grebenschikov P.I., Leusskiy A.I., Tarasevitch L.S, Microeconomics, St. Petersburg 1996., pp. 213- 216

2. Livshits A.Y. Introduction to the Market Economy, Moscow 1991, pp.158-161

3. McConnell C.P., et al., Economics, Moscow 1993, pp. 125-7

4. Begg D., Fisher S., Dornbusch R., Economics, 5^th ed., McGraw-Hill 1997, pp. 151-51, 176, 146, 148

5. Lancaster K., Introduction to Modern Microeconomics, 2^nd ed., N-Y 1974, p. 200-1

6. Nicholson W., Microeconomic Theory, 7^th ed., The Dryden Press 1998, pp. 580-4

1 Grebenschikov P.I., Leusskiy A.I., Tarasevitch L.S, Microeconomics, St. Petersburg 1996., p. 213

2 Livshits A.Y. Introduction to the Market Economy, Moscow 1991, p.159

3 Livshits A.Y. Introduction to the Market Economy, Moscow 1991, p. 161

4 I am using the expression “cartel price” for the purpose of simplification. What I mean by it is the high price that resulted from the co-operation agreement between oligopolies.

5