Asked by Heather Shipley on May 14, 2024
Verified
Three major means of collusion by oligopolists are
A) cartels, informal understandings, and price leadership.
B) market sharing, mutual interdependence, and product differentiation.
C) cartels, kinked-demand pricing, and product differentiation.
D) informal understandings, P = MC pricing, and mutual interdependence.
Collusion
Collusion is an agreement between two or more parties, often in secret, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically involving fraud or gaining an unfair market advantage.
Cartels
An agreement between competing firms to control prices or exclude entry of a new competitor in a market, often resulting in higher prices and restricted competition.
Informal Understandings
Unofficial agreements or practices among firms or individuals that dictate behavior without being legally binding.
- Understand the notion and effects of cartels and collusion within businesses.
Verified Answer
SK
Simar KandholaMay 14, 2024
Final Answer :
A
Explanation :
The three major means of collusion by oligopolists include forming cartels, having informal understandings, and practicing price leadership. These strategies help firms in an oligopoly to avoid price wars and maintain stable profits.
Learning Objectives
- Understand the notion and effects of cartels and collusion within businesses.