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Business, 18.07.2020 23:01 ghari112345

Carlos and Deborah have each cheated on their cartel agreement and increased production by 45 gallons more than the cartel amount. However, they both realize that if they continue to increase output beyond this amount, they'll each suffer a decrease in profit. (To see this for yourself, consider Carlos's profit when he produces 90 gallons more than the cartel amount compared to his profit when he produces 45 gallons more than the cartel amount.) Neither Carlos nor Deborah has an incentive to increase output further, nor does either have an incentive to decrease output. This outcome is an example of

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