ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: Collusion most frequently occurs in industries that are: A) oligopolistic. Oligopolistic competition is a market structure characterized by a few large firms.

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: -One of the most common ways of colluding is price fixing. Price fixing occurs when there are a small number of companies, commonly referred to as an oligopoly, in a particular supply marketplace. This limited number of businesses offer the same product and form an agreement to set the price level.

Detailed explanation-4: -Examples of oligopolies can be found across major industries like oil and gas, airlines, mass media, automobiles, and telecom. The existence of oligopolies does not imply that there is coordination or collusion going on.

Detailed explanation-5: -Collusion tends to be more likely, the fewer firms in the industry. Suppose that there are many firms of identical size and of large capacity in the same industry. In a collusive situation, each sets a high price and gets a rather small share of the total profits.