Suppose that the soft coal industry is a competitive industry and it is in the long run equilibrium. Now suppose that the firms in the industry form a cartel.
Q1. What will occur to the equilibrium output and price of coal and describe why?
Q2. After the cartel is operating, are there any incentives for the individual firms to cheat? describe why?
Q3. Does the option of entry by all potential firms make a difference in the behavior of cartel?