ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Collusion occurs when oligopoly firms make joint decisions, and act as if they were a single firm. Collusion requires an agreement, either explicit or implicit, between cooperating firms to restrict output and achieve the monopoly price.

Detailed explanation-2: -Collusive oligopoly is a form of the market, in which there are few firms in the market and all of them decide to avoid competition through a formal agreement. They collude to form a cartel, and fix for themselves an output quota and a market price.

Detailed explanation-3: -Answer and Explanation: The market structure where collusion can happen is an oligopoly market structure. In the oligopoly market, the products are slightly differentiated products or very close substitute products.

Detailed explanation-4: -If oligopolists compete hard, they may end up acting very much like perfect competitors, driving down costs and leading to zero profits for all. If oligopolists collude with each other, they may effectively act like a monopoly and succeed in pushing up prices and earning consistently high levels of profit.