Why is collusion more likely in a repeated game?
What will be an ideal response?
First, a firm can signal other firms that it wishes to cooperate in one period, which could lead to collusion in subsequent periods. Second, a firm can punish a firm for not restricting output. The threat of punishment makes collusion more likely.
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Suppose there are 1,825 taxi medallions in Boston, each valued at about $250,000. Assume the price elasticity of demand for taxi rides is 1; the current price for a taxi ride is $4.75 per mile, and the cost of the ride is $3.00 per mile. How much would a person be willing to pay for a new medallion if the city increased the number of medallions to 2,000? (Hint: The price of the medallions is equal to the total profit from the average total number of miles each medallion will accumulate.)
A. $250,000 B. $160,000 C. $337,000 D. $185,000
An example of a positive externality is
A. Increased business profits at a hardware store that benefited from a tornado. B. Increased factory use of private sector robotics that came from government research. C. Increased health problems from air pollution. D. None of the choices are correct.