Which of the following factors increase the likelihood that an oligopolist will collude with other firms in the industry? Which increase 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 oligopolist has a lot of unused production capacity but knows that its rivals are operating at their maximum production capacity and cannot increase the amount they produce.