No need for this site, nor their owners to risk the Feds breathing down their neck. The use of this site for collusion would be a complete conflict of interest, thus, you cut off the head of the snake before it bites you. IMO, it's a sign of good management...
Collusion definition from Wikipedia:
Collusion is an agreement between two or more persons, sometimes illegal and therefore secretive, to limit open
competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage.
[citation needed] It is an agreement among firms to divide the market, set prices, or limit production.
[1] It can involve "wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties".
[2] In legal terms, all acts affected by collusion are considered
void.
[3]
Contents
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[edit] Definition
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.
[edit] Variations
According to
neoclassical price-determination theory and
game theory, the independence of suppliers forces prices to their minimum, increasing
efficiency and decreasing the price determining ability of each individual firm. However, if firms collude to increase prices, loss of sales is minimized, as consumers lack alternative choices at lower prices. This benefits the colluding firms at the cost of
efficiency to society.
One variation of this traditional theory is the theory of
kinked demand. Firms face a kinked demand curve if, when one firm decreases its price, other firms will follow suit in order to maintain sales, and when one firm increases its price, its rivals are unlikely to follow, as they would lose the sales' gains that they would otherwise get by holding prices at the previous level. Kinked demand potentially fosters
supra-competitive prices because any one firm would receive a reduced benefit from cutting price, as opposed to the benefits accruing under neoclassical theory and certain game theoretic models such as
Bertrand competition.
[edit] Indicators
Practices that suggest collusion include:
- Uniform prices
- A penalty for price discounts
- Advance notice of price changes
- Information exchange
[edit] Examples
Collusion is largely illegal in the
United States,
Canada and most of the
EU due to
competition/antitrust law, but implicit collusion in the form of
price leadership and tacit understandings still takes place. Several examples of collusion in the United States include:
There are many ways that implicit collusion tends to develop:
- The practice of stock analyst conference calls and meetings of industry participants almost necessarily results in tremendous amounts of strategic and price transparency. This allows each firm to see how and why every other firm is pricing their products.
- If the practice of the industry causes more complicated pricing, which is hard for the consumer to understand (such as risk-based pricing, hidden taxes and fees in the wireless industry, negotiable pricing), this can cause competition based on price to be meaningless (because it would be too complicated to explain to the customer in a short advertisement). This causes industries to have essentially the same prices and compete on advertising and image, something theoretically as damaging to consumers as normal price fixing.
, spend it as you like.