In markets characterized by oligopoly,
a. the oligopolists earn the highest profit when they cooperate and behave like a monopolist.
b. collusive agreements will always prevail.
c. collective profits are always lower with cartel arrangements than they are without cartel arrangements,
d. pursuit of self-interest by profit-maximizing firms always maximices collective profits in the market.

In oligopoly markets, firms are interdependent, meaning the actions of one firm can significantly impact the others. Historically, collusion has been a common strategy where firms may engage in agreements to set prices and limit production, mimicking monopoly behavior to maximize collective profits. However, this is often illegal and can lead to anti-competitive practices, attracting scrutiny from regulatory bodies.

In the real world, while cooperation might seem profitable in theory, the temptation to cheat is always present. The infamous prisoner’s dilemma elegantly illustrates this: two firms might agree to keep prices high, but if one secretly undercuts the other, they can gain a larger market share, leading to a collapse of the collusive arrangement. This back-and-forth dynamic can make sustaining collusion extremely tricky in practice!