When oligopoetic companies think about the quantity to be produced and the price to pay, they are tempted to work with other companies to assert that they are a single monopoly. Common measures allow oligopolistic companies to maintain industrial production, demand a higher price and share profits. When companies work together in this way to reduce production and keep prices high, this is called collusion. A group of companies that have a formal agreement on monopoly production and monopoly selling is referred to as an „agreement.“ The problem with notification is finding solid evidence of collusion. Cartels are formal agreements. Because cartels provide evidence of collusion, they are rare in the United States. Instead, most agreements are implicit, in which companies implicitly recognize that competition is bad for profits. Perhaps the simplest approach for collusant oligopolists, as you can imagine, would be to sign a contract together, that they keep production low and keep prices high. If a group of U.S. companies signed such a contract, it would be illegal. Some international organizations, such as the member countries of the Organization of the Petroleum Exporting Countries (OPEC), have signed international agreements to act as a monopoly, maintain production and maintain high prices so that all countries can reap high profits from oil exports.
However, such agreements are not legally applicable because they are in the shadow of international law. In addition, oligopolies can act in such a way that each company is under pressure to maintain its agreed production volume. In 2015, Apple and Google were investigated over an agreement between the two companies, in which they agreed not to hire employees of the other company. Would you expect the downward pattern of demand to be more extreme (like a right angle) or less extreme (like a normal demand curve) when each antitrust company produces an almost identical product like OPEC and oil? What if each company makes a slightly different product? Explain your reasoning. In the context of the study of the economy and competition in the market, agreements are concluded within the same sector when competing companies cooperate in their mutual interest. Agreements often take place within an oligopoly structure where there are few companies and agreements have a significant impact on the entire market or on the sector as a whole. In order to distinguish an agreement, collusive agreements between parties must not be explicit; However, the effects of agreements and agreements are the same. [4] In an oligopoly, will companies act more as a monopoly or rather as competitors? Tell me.
If a company lowers its price to $300, it can only sell 11,000 seats. However, if the airline tries to raise prices, other oligopolists will not increase their prices and the company that has increased prices will lose a significant share of the turnover. For example, if the company raises its price to 550 $US, the turnover falls to 5,000 seats sold. Therefore, if oligopolists are still reassessing the price declines of other antitrust authorities, but no price increases, none of the oligopolists will have a strong incentive to change prices, as the potential benefits are minimal. This strategy can function as a silent form of cooperation, in which the agreement manages to maintain production, increase price and share a monopoly on profits, even in the absence of a legally binding agreement.
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