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Think of it as accidental collusion. They'd explicitly collude to raise prices if they could. But with anti-collusion laws they can't. Raising prices in i
by bryanlarsen 2y ago
Think of it as accidental collusion. They'd explicitly collude to raise prices if they could. But with anti-collusion laws they can't. Raising prices in isolation would be disastrous. Taking advantage of an opportunity to raise prices together was a gold mine.
- nradov 2y agoOne typical approach to pricing in competitive industries is that one company will take a risk and raise their prices, then watch to see if competitors follow. If most other companies respond by also raising prices then the price increase sticks. But if competitors hold prices steady then the first company will fold and quickly roll back the price increase. The effects are somewhat similar to collusion, but this is completely legal because the companies aren't communicating directly.