Consider two firms that sell substitute products and compete with one another in various markets across the country. As a casual observer of the market, you do not know the demand function for each of these products nor the firms' cost functions. You read a newspaper article that claims these two firms are colluding for the following reasons:
(a) The firms' price changes match each other quite closely over time
(b) When it is known or likely that their costs have risen, both firms raise their prices
(c) When a rival firm selling a substitute product entered the market, both of the original firms lowered their prices 1
(d) There are markets where only one of the firms is operating, indicating that the firms have divided the country into local monopolies among themselves
For each of the reasons, explain whether you agree or disagree with the newspaper article's author and reference the predictions of the oligopoly models we have examined whenever relevant.