Explain the economic theory behind deterrence and collusion

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Lysine
Explain the economic theory behind deterrence and collusion.
According to the economic theory of deterrence and collusion, firms seek to collude in the hope of setting market prices. The goal here is to increase industry profits while limiting the smaller firms from having any impact in the market.
What is the argument for charging firms damages for participating in a cartel? What is the motivation behind trebling payoffs?
The argument for charging firms damages for participating in a cartel stems from the fact that small firms and customers end up being pawns in the market. Small firms are greatly affected as their impact and efforts in the market are completely thwarted.
The motivation behind trebling payoffs comes from the exploitative prices set by the cartels.
What should be included in the set of damages from a cartel? What are the costs of a cartel to the economy?
The costs incurred by consumers as well as the losses experienced by the small firms as a result of the deterrence efforts of the cartels.
Cartels can be damaging to the economy. They first ensure that prices are higher than competitive prices. They can also prevent development in ways that will help ensure prices are lowered.
Give the history of lysine industry.
The Lysine industry was one that was not dominated by many players. As of 1980, there were only three main players in the industry. These companies had the monopoly of setting the prices which was around $1.65 per pound. However, the entry of ADM meant that prices had to go down.
a. What type of product is lysine? Where has its historical demand come from? How has this change over time?
Lysine is an amino acid.
Lysine is a crucial amino acid that helps in nutrition for both animals and humans. Its historical demand comes from the need to supplement animal feeds with this vital amino acid. In the past, however, demand was low. Today, demand for lysine continues to rise as meat consumption increases and animal feeds becomes a booming business.
b. How did the early manufacturers of lysine price? How did technological change affect their pricing?
The market deter...