ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When two cars collide on the road
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a secret agreement between two competing firms to sell their similar products at the same price
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a secret meeting
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when one business buys another one that sells similar products
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Detailed explanation-1: -Collusion is a non-competitive, secret, and sometimes illegal agreement between rivals which attempts to disrupt the market’s equilibrium. The act of collusion involves people or companies which would typically compete against one another, but who conspire to work together to gain an unfair market advantage.
Detailed explanation-2: -Collusion is primarily an illegal secretive agreement or cooperation between two parties intending to disrupt market stability. Generally, individuals or companies who normally compete against each other decide to work together and influence the market to achieve competitive market advantage.
Detailed explanation-3: -There are two types of collusion tacit collusion and explicit collusion. The tacit technique employs various methods to achieve results, the most popular being price leadership. The other type is explicit collusion, where businesses openly coordinate to agree on collusive methods.
Detailed explanation-4: -"The Three Types of Collusion: Fixing Prices, Rivals, and Rules” by Robert H.
Detailed explanation-5: -Examples of collusion are: Several high tech firms agree not to hire each other’s employees, thereby keeping the cost of labor down. Several high end watch companies agree to restrict their output into the market in order to keep prices high.