Illegal Agreement By Firms To Charge A Uniform Price For A Product


Let`s first take Company A, Company A will maximize its profits by selling OM`s production level at the MP price, because in OM production, Company A will be in equilibrium, because its marginal costs at point E are equal to marginal revenues. Sale at the production level at the NK price, which is higher than the MP price. Two companies must demand the same price to succeed in the sector. Therefore, Company B must accept and follow the price set by Company A. This shows that Company A is the leader of the award and Company B is the successor. If the price of a new supplier is lower than the company`s usual offer price, the reason may be that there is an agreement between the existing companies. (a) If an industry consists of two large enterprises, each of which sells identical or homogeneous products and has half of the total market, the pricing and production policies of each sector are expected to have a significant impact on the other, which is likely to be agreed between the two companies. Companies can agree on a price, divide the overall market or allocate quotas, group together into a single entity and form a monopoly or try to differentiate their products or accept the price set by the leading company, etc. A: No. Competitor pricing can be a good deal and often occurs in highly competitive markets.

Each undertaking is free to set its own prices and may charge the same price as its competitors as long as the decision was not based on an agreement or coordination with a competitor. Pricing between different firms can, to some extent, influence consumer choices and affect small businesses that depend on these suppliers. [37] (a) price leader of a dominant company, i.e. the company that produces most of the industry`s product. It sets the price and the rest of the companies simply accept that price. 5. Distribution costs: To wrest markets from their competitors, oligopolistic companies can make aggressive and significant promotions by advertising and changing the design and improving the quality of their products. 3. It is often found that there is price stability under the oligopoly. This is because the oligopoly avoids experimenting with price changes. He knows that if he raises the price, he will lose his customers and if he lowers it, he will invite his rivals into a fight for prices.

An attempt to fix the price of tuna resulted in a $25 million fine for Bumble Bee Foods in 2017 and a $100 million fine in 2020 for StarKist. Christopher Lischewski, the former CEO of Bumble Bee, was sentenced to 40 months in prison and fined US$100,000 for his participation from 2010 to 2013. [34] (a) Duopol: When there are two large companies in a sector, we speak of a duopoly. The duopoly is classified as follows: (a) The cost of excessive prices and insufficient production: the monopoly, by keeping production a little tight, increases its price above marginal costs. Therefore, society does not receive as much from monopoly production as it wants with regard to marginal costs and the limit value of the product. The same applies to oligopoly and monopolistic competition. 7. Well-being effect: under the oligopoly, vacuum sums are invested in sales promotion to create differentiations in quality and design. From the point of view of economic prosperity, the oligopoly is therefore declining quite badly. Oligopolites push price non-competition beyond socially desirable limits. Under U.S.

law, price exchange between competitors may also be contrary to antitrust law. These include price exchange for the purpose of increasing prices or exchanges that affect prices set by individual competitors. Evidence that competitors have common prices can be used in the context of evidence of an illegal price cartel. [7] In general, experts advise that competitors avoid even the appearance of a price conversion. [8] The price and production behaviour of firms operating under oligopolistic or duopolistic market conditions can be examined on two main themes: 3. . . . .