Why is collusion more likely in a repeated game? What will be an idea

Why is collusion more likely in a repeated game?

What will be an ideal response?

 

ANSWER

First, a firm can signal other firms that it wishes to cooperate in one period, which could lead to collusion in subsequent periods. Second, a firm can punish a firm for not restricting output. The threat of punishment makes collusion more likely.

 

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