ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPETITION AND MARKET STRUCTURES

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Secret agreement among firms to sell at the same or similar prices
A
Cartel
B
Collusion
C
Monopolistic Competition
D
Oligopoly
Explanation: 

Detailed explanation-1: -Sometimes there is no communication between firms but a group of firms will all sell for the same price to achieve the same effect. Firms might also deliberately avoid undercutting a competitor to achieve the same effect without making an agreement, this is called tacit collusion.

Detailed explanation-2: -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-3: -"The Three Types of Collusion: Fixing Prices, Rivals, and Rules” by Robert H.

Detailed explanation-4: -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-5: -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.

There is 1 question to complete.