Economics Monopolistic Competition Questions
Collusion in monopolistic competition refers to an agreement or understanding between firms operating in the same industry to coordinate their actions in order to maximize their joint profits. This collusion can involve various strategies, such as price fixing, output restrictions, or market sharing. By colluding, firms can effectively reduce competition and maintain higher prices and profits in the market. However, collusion is generally considered illegal and anti-competitive behavior in many countries, as it restricts consumer choice and leads to higher prices for consumers.