Question

The profit increase is clear now. If you can raise the price of hearing aids to $2,500 and can get Hanvil to do the same, your profit will increase by 14.6 percent. This would be more than enough to satisfy the shareholders.

Your team presents a bunch of different options to make tacit collusion more likely. You need to narrow down the choices by selecting the four most viable options.

Select the four most viable options from the choices below, and click Submit.

O Direct negotiation
O Price leadership
O Precommitments
O Price war
O Price visibility
O Price following
O Preannouncements

Answer 1

The four most viable options to make tacit collusion more likely are direct negotiation, price leadership, precommitments, and preannouncements.

Step-by-step explanation:

The four most viable options to make tacit collusion more likely are:

1. Direct negotiation: This involves direct communication between the firms to set price and output levels.

2. Price leadership: One firm takes the lead in setting prices and other firms follow suit.

3. Precommitments: Firms make binding commitments to limit output or maintain prices at a certain level.

4. Preannouncements: Firms publicly announce their intentions to maintain prices or limit output, encouraging other firms to follow suit.