How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Bizhelp Your Own Question
Bizhelp, CPA
Category: Homework
Satisfied Customers: 5884
Experience:  Bachelors Degree and CPA with Accounting work experience
Type Your Homework Question Here...
Bizhelp is online now
A new question is answered every 9 seconds

Assume you are the manager of Yabba Cable Company, which provides

This answer was rated:

Assume you are the manager of Yabba Cable Company, which provides commercial communication services to the town of Canyon Lake, Texas. Because of licensing restrictions in the market, only your company and two others (Dabba and Zabba) are allowed to operate in this market. The three companies decide to form a cartel and divide the market shares such that each company will provide services that will maximize its profits. The licensing restrictions allow each company to sell as much as it wants at a price ceiling of $2,400. You have the following output and MC data for each company:
Output MC ($)
Q Yabba Dabba Zabba
1,200 2,700 2,800 2,900
2,200 2,600 2,500 2,700
3,200 2,400 2,300 2,500
4,200 2,200 2,200 2,300
5,200 2,300 2,400 2,400
6,200 2,400 2,700 2,500
a. Calculate the industry output and market share at the current price of $2,400, assuming the prices are stable and unlikely to change.
b. Assume the current prices in the market are challenged by the regulatory agency, resulting in a new maximum price of $2,200. How will this change the industry output and market share for each company?
c. Is there any incentive for any company to cheat under either of the conditions in tasks a and b? Why or why not?

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Bizhelp and 3 other Homework Specialists are ready to help you
Customer: replied 5 years ago.

Hi Bizhelp:


Thank you for the concept and some answers for the assignment program. I was struggling for a while to get the answer working on two oligopoly models I learned in class. Is this like Bertrand model thank you.


Hi Danielle,

You are welcome.

The Bertrand model deals with duopolies or how two companies compete with each other without any cooperation between the firms. This problem deals with cartel pricing behavior which is a bit different since there is cooperation between firms.

If you are satisfied with my service, please rate me as good service or better so that I may receive credit for my work.

Thank you and have a great weekend.