ECONOMICS (CBSE/UGC NET)

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: -Collusion occurs when rival firms agree to work together – e.g. setting higher prices in order to make greater profits. Collusion is a way for firms to make higher profits at the expense of consumers and reduces the competitiveness of the market.

Detailed explanation-4: -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.