c) Collusion

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Last updated 9:10 PM on 6/28/26
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5 Terms

1
New cards

  • define collusion

  • when firms work together to fix pricing and restrict output

2
New cards

  • define overt collusion

-

  • state the methods of overt collusion

  • when firms explicitly agree to collude

-

  • price fixing

  • output quotas

  • cartels

3
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  • define tacit collusion

-

  • state the methods of tacit collusion

  • when firms monitor and follow each others pricing/output

-

  • price leadership

4
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  • state the reasons firms may collude

  • state the reasons firms may not collude

  • higher profit

  • interdependence

  • less competition

-

  • incentive to cheat

  • difficulty enforcing

  • illegal

5
New cards

  • state the effects of collusion on consumers/firms

  • high prices

  • artificial scarcity

  • poor quality goods and services

  • less investment