Collusive Oligopoly Flashcards
1
Q
In a collusive oligopoly
A
Firms agree to work together. In doing so they form a cartel which operates as a monopoly.
2
Q
This means that they
A
Can agree to price fix to make the price artficially high relative to what it would be undercompetition
3
Q
Overt collusive agreements are illegal but covert or tacit collusion still takes place.
A
Barometric price leadership means that other firms follow the pricing example of the market leader. Increase their prices together without formal agreement.
