1.1. Which of the following factors increase the likelihood that an oligopolist will collude with other firms in the industry? The likelihood that an oligopolist will act noncooperatively and raise output? Explain your answers.

a. The firm’s initial market share is small. (Hint: Think about the price effect.)

b. The firm has a cost advantage over its rivals.

c. The firm’s customers face additional costs when they switch from the use of one firm’s product to another firm’s product.

d. The firm and its rivals are currently operating at maximum production capacity, which cannot be altered in the short run.