In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Collusion most often takes place within the market structure of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole. Cartels are a special case of explicit collusion. Collusion which is not overt, on the other hand, is known as tacit collusion.
How is OPEC a collusive oligopoly?
Answer:
OPEC is a collection of oil exporting countries.
Oligopoly - Industry that is controlled by a few major players (firms or countries) Collusion - When industry leaders secretly agree to limit quantities of production. This will guarantee the colluders a higher price for their product
OPEC meet to discuss the quantity of oil they will allow onto the world market. This is collusion. Because the OPEC members are the main suppliers of oil they are said to be an
Collusion and Cartels by David A. Mayer
One of the blessings of competition is that it leads to lower prices for consumers. For the producer, however, this blessing is a curse. Low prices often mean low profits. Given a choice between competition and cooperation, profit-maximizing firms would more often than not prefer cooperation. Regardless of what you learned in kindergarten, you do not want the