Imperfect Competition: Tacit Collusion

Imagine that you are the owner of a firm. You would like your firm to enter the market in an area where there is imperfect competition and possible tacit collusion. Analyze the market environment to determine whether or not it would be a wise strategy for you to enter the market.

Write a three to five (3-5) page paper that answers the following:

1. Analyze a market environment with tacit collusion, including deterrents from entry.

2. Evaluate the profitability of entering the market.

3. Examine how the time horizon affects the profitability of entering the market.

4. Determine whether or not you should enter the market and justify your answer.

The format of the paper is to be as follows:

o Typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format.

o Use headers for each of the subjects being covered, followed by your response.

o In addition to the three to five (3-5) pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.