Economics Oligopoly Questions
Price collusion in oligopoly refers to an agreement or understanding among a few dominant firms in an industry to coordinate and manipulate prices in order to maximize their profits. This collusion typically involves setting prices at artificially high levels, limiting competition, and reducing consumer choice. It is often achieved through secret agreements, such as price-fixing or market-sharing arrangements, which can be illegal and subject to antitrust laws in many countries. Price collusion allows oligopolistic firms to maintain their market power and collectively act as a monopolistic entity, leading to higher prices and reduced welfare for consumers.