Collusive Oligopoly
Definition
A collusive oligopoly refers to a market structure where a small number of firms collaborate to restrict competition and maximize their joint profits. These firms work together by setting prices, output levels, or engaging in other forms of coordination.
Related terms
Cartel: A cartel is a specific type of collusive oligopoly where firms formally establish an agreement to coordinate their actions, such as setting prices or dividing markets.
Price Leadership: Price leadership occurs when one firm in an oligopoly takes the lead in setting prices, and other firms follow suit.
Game Theory: Game theory is a mathematical tool used to analyze strategic interactions between individuals or groups, including situations like collusion in oligopolistic markets.
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Practice Questions (1)
What is a characteristic of a collusive oligopoly?
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Cram Mode
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© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.