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Collusion
An agreement between firms in an oligopoly to avoid competition, usually by fixing prices or limiting production, which is often illegal.
Implications
An illegal agreement between competitors to limit competition, often by fixing prices, rigging bids, or dividing markets, to manipulate market outcomes and increase profits.
Example
Example: Several airlines are fined for collusion after agreeing to fix fuel surcharges, resulting in higher prices for consumers.
Related Terms
Different from strategic alliances, which are legal and involve cooperation between companies, collusion is illegal and aims to undermine competition.
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