Final answer:
The outcome of a colluding oligopoly is similar to that of a monopolist, as both involve firms working together to reduce output and keep prices high. In a duopoly, this resembles a prisoner's dilemma with incentives to collude for higher profits. Option B is correct as it identifies a colluding oligopoly's outcome as being the same as a monopolist's.
Step-by-step explanation:
The outcome of a colluding oligopoly is most similar to that of a monopolist. This is because when firms in an oligopoly collude, they reduce competition among themselves by agreeing on prices or quantities, thereby acting similarly to a single monopolist that controls the market.
When we consider the prisoner's dilemma in the context of an oligopoly—particularly, a duopoly where there are only two major players—we can see that both firms have an incentive to cooperate and reduce output in order to maintain higher prices and profits. If they both collude, they can achieve monopoly-like profits. However, there is a constant temptation for each firm to defect from the agreement in the hopes of increasing its own market share and profits at the expense of the other.
In scenarios where the firms in an oligopoly act more like competitors, they tend to increase their production, which drives prices down, resulting in an outcome similar to a more competitive market. On the other hand, if they act like a monopolist and collude, they limit output and set higher prices, which is less efficient than a competitive market because they are not maximizing the allocation of resources according to consumer demand.
Therefore, the correct option in this context is: B. is the same as that of a monopolist.