Bistrup Gruppe, Hjørring, Halvorsmindevej 28

Collusive Agreement Oligopoly

In the study of the economy and competition in the market, collusion takes place within a sector when competing companies cooperate for their mutual benefit. Agreements often take place within an oligopolistic market structure where there are few companies and where agreements have a significant impact on the overall market or on the sector as a whole. Collusive agreements between the parties need not be explicit in distinguishing an agreement; However, the effects of cartels and collusion are the same. [4] Collusion is a fraudulent agreement or secret cooperation between two or more parties in order to restrict open competition by deceiving, misleading or deceiving others about their legal right. Cartels are not always considered illegal. It may be used to achieve purposes prohibited by law; for example, by defrauding or obtaining an unfair business advantage. It is an agreement between companies or individuals, to share a market, to set prices, to limit production or to limit possibilities. [1] These may be “unions, wage agreements, bribes or misrepresentation of the independence of the relationship between the conspiring parties.” [2] From a legal point of view, all acts committed by collusion are considered null and void. [3] Like the prisoners` dilemma, cooperation in an oligopoly is difficult to maintain, as cooperation is not in the best interests of the various actors. However, the collective result would improve if the companies cooperated and were thus able to maintain low production, high prices and monopolistic profits. Agreements can take many forms in different types of markets.

In each scenario, groups enjoy an unfair advantage.