Collusion And Demerger Flashcards
1
Q
Tacit collusion:
A
Informal, firms following the other
2
Q
Covert collusion:
A
Illegal, secretly agree behind closed doors
3
Q
Reasons for a collusion
A
Cheaper
Calves up market
Monopoly over certain areas
4
Q
Why break a collusion?
A
Gain more market share Avoid damage to business image Avoid being fined Make more profit Advantage to first mover
5
Q
Problems with breaking a collusion
A
No more collusion Lose future profit Size of fine Damage to brand image Not enough information to see if it was the right thing to do May be other reasons e.g expand
6
Q
What is a demerger?
A
When a firm splits into two
Cadbury split with Dr Pepper
7
Q
Why would a firm demerge
A
Focus on the core business Reduce risks of diseconomies of scale Raise money from asset sale A defensive tactic No better off merged
8
Q
Issues a demerger may cause
A
Expensive Time -long No perfect knowledge Unemployment Open opportunities
9
Q
Formal collusion:
A
Hotels agree to raise price at certain times
