The above figure shows the market for the three moving companies in a small nation
If the movers act as perfect competitors, what is the price per mile and the number of miles per year? If the movers collude and act as a single monopoly, what is the price per mile and the number of lines per year?
If the movers compete, production will be where the demand and supply curves intersect, 300 million miles of moving per year. The price will be 8¢ per mile. If the movers can successfully collude, then production is at the point where MR = MC, only 200 million miles of moving per year, and the price is 12¢ per mile.
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