Over the last 40 years, the Organization of Petroleum Exporting Countries (OPEC) has had varied success in forming and maintaining its cartel agreements. In the following question, choose the answer that best describes how the following factor may contribute to the difficulty of forming and/or maintaining its price and output agreements.
New oil fields are discovered and increased drilling is undertaken in the Gulf of Mexico and the North Sea by nonmembers of OPEC.
A. The product will now be more differentiated and that will make the cartel agreement harder to maintain.
B. This will lead to less competition and make the cartel agreement harder to maintain.
C. This will lead to a fall in market price and make the cartel agreement harder to maintain.