Easy writing microeconomic question (Cartel formation)
Theoretical models of cartel formation suggest that cartels are harder to sustain, the more members firms there are. The empirical evidence, however, is mixed. In their survey of recent empirical cartel studies, Levenstein and Suslow (Journal of Economic Literature, 2006) state, for example,
...there is no simple relationship between the number of firms in a cartel and the likelihood of collusion.
Explain why results from empirical studies using cartel case data should be interpreted with caution. Extend this argument to explain how the empirical findings might differ from the theoretical prediction in the case of the relationship between the number of cartel members and cartel stability