Economics Oligopoly Questions
The price collusion model in oligopoly refers to a situation where firms in an oligopolistic market coordinate with each other to set prices at a higher level than what would be determined under normal competitive conditions. This collusion allows the firms to maximize their profits collectively by reducing price competition and maintaining higher prices in the market. The firms involved in price collusion often engage in secret agreements or understandings to avoid undercutting each other's prices and to restrict output levels.