Principles of Microeconomics / Unit 9 MIC 0821 short lesson, about 20 seconds
Collusion and Cartels
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The idea
Collusion is firms acting together to restrict output and raise price toward the monopoly level. A cartel is a formal agreement to do so. Collusion is illegal in most countries, so most is tacit.
In practice
Price leadership, where rivals follow one firm's changes, needs no meeting.
Where people slip
Prices moving together is not proof of collusion; competitive prices move together when costs change.
Your place on the trail
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