Collusion: Collusion is an agreement between two or more firms to restrict competition or fix prices in order to gain market power. This can be done by shar...
Collusion:
Collusion is an agreement between two or more firms to restrict competition or fix prices in order to gain market power. This can be done by sharing information, coordinating production, or forming a monopoly. Collusion can be vertical, where two firms control different parts of the market, or horizontal, where three or more firms control the entire market.
Cartel:
A cartel is a group of firms that collude to set prices or restrict competition. Cartels are usually illegal because they violate the antitrust laws of many countries. Cartels can be formed voluntarily by firms who agree to collude, or they can be formed through a government investigation.
Examples:
Collusion: The pharmaceutical company Pfizer and the biotech company Biogen have been accused of colluding to fix prices for their drugs.
Cartel: The oil companies OPEC and the major energy companies have been accused of forming a cartel to control the global energy market.
Collusion and cartels are both harmful to consumers because they reduce competition and increase prices. Collusion can also lead to lower quality products or services, as firms are able to dictate the prices that consumers are willing to pay. Cartels can also lead to higher prices, as firms are able to set prices that are higher than what they would be if there was competition