Cartel Formation and Stability Simulator

📖 Learning Objectives

Understanding Cartel Dynamics: When firms collude to form a cartel, they agree to restrict output and act like a monopoly. However, each individual firm has an incentive to "cheat" on the agreement by secretly producing more than its quota.

Use the controls below to explore how the number of firms and the cooperate/cheat decision affect profits and market outcomes.

Market Parameters

Number of Firms in Cartel: 4

Market Outcomes

Total Quantity

Market Price

Cooperator Profit

Cheater Profit

Detailed Market Outcomes
Measure	Value
Total Market Quantity	--
Market Price	--
Output per Cooperating Firm	--
Output: Cheating Firm	--
Profit per Cooperating Firm	--
Cheater's Profit	--
Gain from Cheating	--

💡 Economic Interpretation

Adjust the controls to see how the scenario unfolds.

🔑 Key Insight: The Cartel Instability Problem

Select a scenario above to reveal the core tension in cartel theory.

Market View: Profit Distribution

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Cheater's Perspective: Residual Demand

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