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Nov 13, 2020 · Collusion is a way for firms to make higher profits at the expense of consumers and reduces the competitiveness of the market. In the above example, a competitive industry will have price P1 and Q competitive. If firms collude, they can restrict output to Q2 and increase the price to P2.
- OPEC
For example, Qatar might try to take advantage of the higher...
- Cartels
For example, the high price of oil encouraged other...
- Average Cost Pricing
For example, the average total cost will have to include not...
- Game Theory
Collusion and game theory. If firms are competitive and they...
- Increasing The Money Supply
For example in Zimbabwe 2000s – the government printed more...
- Pricing Strategies
When firms set a price depending on supply and demand. For...
- OPEC
- Question
- Kaa 1
- Eval 1
- KAA2
- Eval 2
- Conclusion
Evaluate the view that collusion between firms in an oligopoly always works against consumer and society’s interests. Use game theory in your answer.
An oligopoly is where the industry or market is dominated by a few producers/firms with a high level of market concentration, where the component firms have a high level of interdependent decision making. Collusion can be tacit and/or explicit, and the aim of which is to achieve higher supernormal profits, with the firms as a whole achieving joint ...
However, collusion between firms can often derive benefits for consumers. For instance, tacit collusion includes firms who monitor what other firms sell to ensure that they are matching the cheapest price in a geographical area, or who market that consumers are “never knowingly undersold” such as John Lewis. This is a case in which firms are techni...
Collusion in an oligopoly can hugely benefit firms, which can have beneficial consequences for society. For instance, collusion between coffee growers allows small firms to push for fairer prices against more dominant monopsonistic corporations such as Starbucks. Furthermore, because these producer cooperatives like Fairtrade are often based overwh...
However, the extent to which this occurs depends on a few factors. Firstly, the vast majority of collusion that takes place isn’t that of poor farmers working together - oligopolies are more concentrated industries with very high barriers to entry, such as the Big Four Accountancy Firms, and pharmaceutical companies. Furthermore, the benefits that ...
In conclusion, the extent of the impact on consumers and firms depends fundamentally on how long the oligopoly is able to carry on collusion - we can analyse this through game theory. Assuming the following pay offs in a cartel such as OPEC, where states agree to collude to reduce production levels and benefit from a higher price: If all firms coop...
May 25, 2024 · Collusion is a non-competitive, secret, and sometimes illegal agreement between rivals that attempts to disrupt the market's equilibrium. The act of collusion involves people or companies that...
Collusion occurs when producers in an industry co-operate in order to achieve a collective gain or avoid a collective loss. There are several possible motives which drive the desire to collude, including: Increasing joint profits. Agreeing common terms of supply, such as delivery dates. Sharing knowledge. Collectively withholding knowledge.
May 28, 2017 · What is collusion? Collusion is any explicit or tacit agreement between suppliers in a market to avoid competition either by price fixing or market sharing. The main aim is to achieve a level of joint profits similar to that which might be achieved by a pure monopolist.
A problem-solution essay is a form of argumentative writing that looks into a specific issue, providing a detailed examination of the problem and proposing effective solutions.
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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.
