Collusive strategy definition. collusive synonyms, collusive pronunciation, collusive translation, English dictionary definition of collusive. What is Collusion? Collusion is an anti-competitive business practice where two or more parties cooperate to maximize their profits and gain an unfair advantage over the market prices and hence, market equilibrium. Definition A collusive oligopoly is a market structure where a small number of firms agree to cooperate in order to set prices or output levels, effectively acting like a monopoly. These terms describe how firms in an oligopolistic market interact with each other in terms of pricing, output, and competition. Through collusion, firms act collectively as if they Jan 22, 2015 · Cooperative strategies are categorized into the two main subsets of collusive strategies and strategic alliances. And the second one is a collusive strategy, in which two or more firms work together to raise prices above the level of full competition. Jan 1, 2018 · Although collusive practices are not restricted to the economic relationships of a well-defined sub-group in society, it is common to use the term collusion in the context of cooperative activity between different firms. 13 Shumaila The former is easily understood as a credible threat will ensure no deviations are made, and the latter is related with how much does each party value the profits obtained from the results of following a collusive strategy, compared to the possible profits of changing their strategy. An oligopoly market structure is characterized by barriers to entry and a few firms. Non-Collusive Oligopoly: Sweezy's Kinked Demand Curve Model: One of the important features of oligopoly market is price rigidity. DISCUSS THE DIFFERENCES BETWEEN A COLLUSIVE AND A NON-COLLUSIVE OLIGOPOLY. Collusive Oligopoly: Collusive Oligopoly, also known as Cooperative Oligopoly, is a market where different firms cooperate with each other to determine the output or price, or both price and output of products. Feb 1, 2024 · Importantly, however, we also identify another collusive strategy that forms an equilibrium for a wider range of discount factors than collusion in standard Bertrand markets, though is less profitable. First, one determines the optimal strategy of the player who makes the last move of the game. "Collusive Practices" means any merger, acquisition, or joint venture executed with the intent to eliminate competition, fix prices, or restrict consumer options. It can be used to attain objectives forbidden by law; for example, by defrauding or gaining an unfair market advantage. In contrast, the dynamics of a Non-Collusive Oligopoly are shaped by strategic interactions among firms, with the potential for price wars and fluctuating market shares. Non-Collusive Oligopoly: If the firms in an oligopoly market compete with each other, then it is known as a Non-Collusive Oligopoly. Definition: Collusion involves secret or overt agreements among competitors to limit competition. Mar 21, 2025 · Learn about oligopoly for your IB Economics course. S. A rational player will always play his dominant strategy. Explore more about oligopoly markets, including their characteristics, types & market concentration. Thus, the cooperative strategy is identical to collusion, where players work together to achieve the best joint outcome. This cooperation can take the form of formal agreements or informal understandings, allowing firms to maximize their collective profits while minimizing competition. Learn more at Higher Rock Education - where all of our Economic Lessons are Free! Jul 3, 2023 · Dominant strategy is a situation in which one particular strategy is the best option for a player regardless of what strategies the opponents choose. If firms collude, they can restrict output to Q2 and increase the price to P2. Nash May 16, 2025 · Collusive Model In the Collusive Model, price leadership is the result of explicit or implicit collusion among competing firms. Dive into game theory and strategic behavior in economics. collusive synonyms, pronunciation, spelling and more from Free Dictionary. A look at the four broad categories of competitive strategies, two with threatening moves (offensive and defensive strategies) and two with non-threatening moves (collusive strategies and strategic alliances). Price collusion is usually a non-competitive and secretive tactic, which may also be illegal. Apr 2, 2025 · Explore collusive practice definitions for contracts. Collusion is an agreement, whether formal (like cartels) or informal (tacit collusion like price leadership, where one firm initiates price changes and smaller firms follow suit in an implicit agreement, usually because formal collusive practices are illegal due to the fact that they limit competition), between May 4, 2019 · Learn about collusion within the context of economics and politics, from its definition to historical examples. Oligopoly markets are markets in which only a few firms compete, where firms produce homogeneous or differentiated products, and where barriers to entry exist that may be natural or constructed. Oligopolies often result in higher prices and reduced output compared to more Home Flashcards Management Ch 11: Managing Global Competitive DynamicsShared Flashcard Set Collusive models are considered illegal if their purpose is to defraud the public. Such collusive pricing is often practiced among duopolies or oligopolies. Defining these threats is a critical step in understanding and establishing an insider threat mitigation program. The Cybersecurity and Infrastructure Security Agency (CISA) defines insider threat as the threat that an insider will use their authorized access An oligopoly is defined as a market structure wherein industries are dominated or handled by “few” firms. Firms operating within various market structures, particularly oligopolies, face a fundamental strategic dilemma: whether to engage in aggressive competition for market share or to cooperate (collude) with rivals to collectively control market outcomes. Jun 15, 2022 · Collusive pricing or price collusion is a scenario when several companies agree to set the price of the good or service unanimously. antitrust laws and the potential for defection act as significant deterrents to Collusion is a business tactic where firms compete to increase prices and maximize profit. Definition An oligopoly is a market structure characterized by a small number of firms that dominate the market, leading to limited competition and significant influence over prices. Oligopolies of this nature are typified by both price stability and lucrative profits for all businesses involved. Factors that guarantee collusion stability: Bid rigging, price fixing, and other collusion can be very difficult to detect. It eliminates healthy competition, and market equilibrium faces disruption. One of these behaviors is collusion—where competitors cooperate, implicitly or explicitly, to stabilize or increase their profits at the expense of market efficiency. Price leadership is commonly used as a strategy among large corporations. One form of collusive oligopoly is a cartel, [18][better source needed] a monopolistic organisation and relationship formed by manufacturers who produce or sell a certain kind of goods in order to monopolise the market and obtain high profits by reaching an agreement on commodity price, output and market share allocation. Explore oligopolies, duopolies, collusion, and cartels through engaging lessons on game theory and imperfect competition at Khan Academy. Aug 8, 2023 · Non-collusive oligopoly offers severe competition among the firms; hence, individual firms start with a specific strategy without colluding with others. What is Collusion? Collusion is a term that is often associated with the act of secret or illegal cooperation between two or more parties for a specific purpose. Apr 17, 2025 · Introduction In modern economic analysis, the interactions among a few powerful firms in an oligopoly often give rise to intriguing strategic behaviors. Jan 19, 2024 · The stability of a Collusive Oligopoly depends on the ability of firms to maintain agreements, which can be threatened by internal cheating or external competition. And to explain the price rigidity in this market, conventional demand curve is not used. Factors affecting collusion Collusion often occurs in oligopoly markets. where two persons (or business entities through their officers or other employees) enter into a deceitful agreement, usually secret, to defraud and/or gain an unfair advantage over a third party, competitors, consumers or those with whom they are negotiating. Price collusion usually This writeup will help you understand the difference between collusive oligopoly and non-collusive oligopoly. However, collusion may be sustained, just as collective action may be sustained in prisoner’s dilemma situations. Sep 4, 2023 · Collusive and non-collusive oligopoly are two different types of market structures characterized by the behaviour of firms within the industry. , The definition of a Nash equilibrium is a. Nov 22, 2024 · When a few large firms dominate a market there is always the potential for businesses to seek to reduce uncertainty and engage in some form of collusive behaviour In an oligopoly, collusion refers to an agreement, either explicit or tacit, between competing firms to coordinate their actions to reduce competition and maximize joint profits. Nov 13, 2020 · Collusion is a way for firms to make higher profits at the expense of consumers and reduces the competitiveness of the market. It involves anticipating and responding to the potential actions of competitors to achieve the best possible outcome for oneself. With the aid of game theory, economists and policymakers can unravel the Price leadership occurs when a dominant firm sets the price for goods or services in the market, typically in an oligopolistic market with homogeneous products. . Collusion is not always considered illegal. Learn more. , where sellers compete COLLUSION definition: 1. Oligopolistic market structure dominates the market structures available, accounting half of the total outputs in the world. A seller should always be able to adopt a pricing strategy that is non-collusive, regardless of what other sellers do. While price fixing may appear advantageous to participating firms Dominant strategy is a term used in game theory to describe a decision that always leads to the best payoff for a player, no matter what the other players do. American Heritage® Dictionary of the English Language, Fifth Aug 28, 2021 · Definition of oligopoly. Collusion refers to an agreement or coordinated action between two or more firms in an oligopoly market to restrict competition and maximize their collective profits, often at the expense of consumers. Jan 22, 2015 · Cooperative strategies are categorized into the two main subsets of collusive strategies and strategic alliances. In other words, no player in the game would take a different action as long as every other player remains the same. Here's a breakdown of the key differences between collusive and non-collusive oligopoly: Mar 14, 2025 · This definition ties "Collusive Practices" to strategic mergers that suppress competition. COLLUSIVE definition: 1. Through collusive strategies, several organizations in an industry cooperate to Apr 3, 2025 · Collusion: Collusion Chronicles: Nash Equilibrium and Collusive Behavior 1. Instead, firms may signal their intentions through various actions, such as pricing behavior or output levels, in order to coordinate their behavior and achieve higher profits. An oligopoly is an industry where there is a high level of market concentration. In the above example, a competitive industry will have price P1 and Q competitive. Learn about Nash Equilibrium, dominant strategies, the prisoner's dilemma, and backward induction in sequential games. There are three main models of Mar 31, 2025 · Collusive behavior in the context of monopolistic competition is a complex and multifaceted issue that has significant implications for markets, consumers, and regulatory frameworks. By definition, collusion involves parties that would normally compete against each other, choosing instead to work together to gain an unfair advantage. Customers have limited choices, often opting for the lowest price. The market consists of only a few players, and each of them has strategic dependencies. Collusive price leadership happens when several dominant companies agree to maintain their prices in a parallel alignment. The Cybersecurity and Infrastructure Security Agency (CISA) defines insider threat as the threat that an insider will use their authorized access Mar 4, 2017 · What is tacit collusion? Tacit collusion is a type of collusive behavior where firms coordinate their actions without explicitly communicating or reaching an agreement. The term ‘collusion’ encompasses various forms of market manipulation Apr 26, 2025 · There are three primary models of price leadership: barometric, collusive, and dominant. If your company has the influence to affect the market, being a price leader can help you generate profits that benefit your company. However, suspicions may be aroused by unusual bidding or pricing patterns or something a vendor says or does. Aug 23, 2023 · Collusive Oligopoly: In a collusive oligopoly, firms form agreements to set prices and production levels in order to maximize their collective profits. Jun 1, 2025 · This chapter introduces the subgame perfect Nash equilibrium as a refinement of Nash equilibrium in extensive form games. The idea of using a non-conventional demand curve to represent non-collusive oligopoly (i. This is ensured by requiring that the players cooperate most of the time. Factors that guarantee collusion stability: Aug 1, 2025 · The definition is based on the idea that a collusive strategy should be one that leads to a substantial amount of cooperation. Meanwhile, non-collusive oligopoly happens when companies compete without working together, which can sometimes mean lower prices and more options for us consumers. What does collusive mean? Information and translations of collusive in the most comprehensive dictionary definitions resource on the web. Primarily, these firms focus on creating a brand through aggressive advertising and marketing tactics. acting together…. This is an illegal means to acquire additional money. net dictionary. The collusive model of price leadership is common in oligopolistic markets. adj. Price leadership can be a beneficial position to hold for a major company in any industry, so it can help to understand the pros and Definition Mutual interdependence refers to a situation where the decisions and actions of firms in an oligopoly market are highly interrelated and interdependent. All players will use a dominant strategy b. The players in game will jointly decide how to reach an efficient outcome c. Factors that guarantee collusion stability: Define collusive. Industries which adapt to these vary from manufacturers of automobiles to breakfast cereal or even television broadcasting to airlines. The meaning of COLLUSION is secret agreement or cooperation especially for an illegal or deceitful purpose. Examples of markets that can be described as oligopolies include the markets for petrol in the UK, soft drinks producers and the major high street banks. Here, strategic maneuvers and adaptability play crucial roles in ensuring company survival and growth. Unlike the dominant firm model, where one company unilaterally leads in pricing, a group of firms jointly decide on price levels in the collusive model. Aug 21, 2025 · 3. May 24, 2024 · Introduction to Collusion in Finance Collusion, the secretive alliance between rivals to manipulate markets or pricing, plays an essential role in finance and economics. In this context, the key characteristics of Feb 10, 2024 · What is Price Fixing? Price fixing refers to the collusive agreement between competitors to set prices at a predetermined level, often stifling competition and distorting market dynamics. 18. Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusive agreements are usually reached in secret, with only the participants having knowledge of the scheme. The cooperative strategy is defined as the best joint outcome for both players together. Collusive pricing is economically desirable from the oligopoly's viewpoint because it results in monopoly profits. Sep 8, 2024 · Trigger strategy is crucial in understanding how cooperation can be sustained in repeated interactions or strategic settings. Cooperative Strategy = A strategy that leads to the highest joint payoff for all players. Then, the optimal action of the Learn about collusion in business, its types, European legal consequences, and strategies to prevent anti-competitive practices. It is critical for a definition of non-collusion to have the property of being unilateral. agreement between people to act together secretly or illegally in order to deceive or cheat…. Rationality is more likely to save you the more players there are. Through collusive strategies, several organizations in an industry cooperate to decre The Strategic Dynamics of Non-Collusive Oligopolies In a non-collusive oligopoly, firms engage competitively rather than cooperating through collusion. A Nash Equilibrium exists when there is no unilateral profitable deviation from any of the players involved. Jan 1, 2017 · In light of the non-collusive mixed strategy equilibrium benchmark with corresponding volatility in prices and outputs, an overall price increase in conjunction with more stable prices and market shares should, ceteris paribus, be considered suspect of anti-competitive practices. Copy, customize, and use them instantly to fit your business needs. Firms in an oligopoly recognize that their individual decisions can have a significant impact on the overall market, leading to a complex web of strategic interactions and considerations. What does collusive mean? Meaning of collusive. Their objective could be to earn more profit or gain more market share. Find information on interdependence, types of collusion and the kinked demand curve. In competitive markets, trigger strategies help explain how firms or players maintain collusive outcomes without formal agreements. 2. 1 Cournot Model of Oligopoly: Quantity Setters Learning Objective 18. Each player will use a strategy that is a best response to what all the other players are doing d. Feb 24, 2019 · Collusive Oligopoly vs Non-Collusive Oligopoly A collusive oligopoly in one in which the member firms engage in price-fixing and cartelization, for example OPEC. Diagrams and different models of how firms can compete - kinked demand curve, price wars, collusion. If the game is repeated, the folk theorem predicts, cooperative solutions are possible. There are three main models of Aug 22, 2006 · A subgame perfect Nash equilibrium is an equilibrium such that players' strategies constitute a Nash equilibrium in every subgame of the original game. With regard to the study of collusion, Let us learn about Non-Collusive and Collusive Oligopoly. Three types of price leadership exist: barometric, where the firm with the best market information sets the price; collusive, where firms collaborate to set prices Collusive and Non-Collusive Oligopoly What is an oligopoly? An oligopoly is a market dominated by a few producers. Main features. c. Home Flashcards Business International Business - Chapter 13Shared Flashcard Set Jul 23, 2025 · Collusive oligopoly means companies team up in secret to control prices, which usually leads to higher prices for us and fewer choices. It may be found by backward induction, an iterative process for solving finite extensive form or sequential games. Oct 6, 2025 · In the prisoner’s dilemma game there is a strictly dominant strategy to defect from cooperation, and hence collusion should fail. Sep 12, 2025 · Common collusive practices include price fixing, synchronized advertising, and sharing insider information. The first type of cooperative strategy is strategic alliance, which will be discussed extensively in this chapter. Conditions under which price leadership occurs Several factors contribute to price leadership, including: Large market share Large companies often have a large capacity and the ability to serve a substantial number of customers in various locations. May 1, 2025 · Antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. price leadership is not an agreement, whereas price-fixing is. How to use collusion in a sentence. Jan 20, 2020 · Oligopoly is a market structure in which a few firms dominate, for example the airline industry, the energy or banking sectors in many developed nations. acting together secretly or illegally in order to deceive or cheat someone: 2. 1: Describe how oligopolist firms that choose quantities can be modeled using game theory. 1), the cooperative outcome is found by summing the two The former is easily understood as a credible threat will ensure no deviations are made, and the latter is related with how much does each party value the profits obtained from the results of following a collusive strategy, compared to the possible profits of changing their strategy. Jan 21, 2025 · Some collusive practices are still practiced, and it is often difficult for the government to prove it. This anti-competitive practice can manifest in various forms, ranging from explicit agreements to tacit understandings among industry players. This equilibrium can be obtained by backward induction in extensive form games with perfect information and obtained by a generalized process of collusion n. May 4, 2019 · Learn about collusion within the context of economics and politics, from its definition to historical examples. Definition of collusive in the English dictionary The definition of collusive in the dictionary is relating to conniving, conspiring and secretly agreeing for fraudulent purposes. Collusion can include secret price or wage fixing, secret rebates, or pretending to be independent of each other when Insider threats present a complex and dynamic risk affecting the public and private domains of all critical infrastructure sectors. Collusive Oligopoly and Non-Collusive Oligopoly |Characteristics of Oligopoly Market What is an Oligopoly? An oligopoly is an imperfectly competitive market structure consisting of a few large firms that sell identical or differentiated products. Jun 6, 2025 · Price leadership can be an effective strategy when attempting to perform at a higher level with competitors in your industry. However, the topic of MC study for Econ101 final Learn with flashcards, games, and more — for free. Apr 8, 2024 · Additionally, collusion may be unstable and difficult to maintain, as firms face a temptation to cheat and undercut the collusive price to gain more market share and profits, which may trigger a price war and erode the collusive profits. Nash Equilibrium is a term used in game theory to describe an equilibrium where each player's strategy is optimal given the strategies of all other players. This equilibrium can be obtained by backward induction in extensive form games with perfect information and obtained by a generalized process of Insider threats present a complex and dynamic risk affecting the public and private domains of all critical infrastructure sectors. Meaning of collusive. In the Prisoner’s Dilemma (Figure 6. This chapter delves into the economic implications of both competition and collusion, examining how the latter can lead to monopoly-like power Nov 21, 2023 · Learn how to define collusion in economics and see how it works. 4. Acting in secret to achieve a fraudulent, illegal, or deceitful goal. Unlike explicit collusion, which involves direct An oligopoly is defined as a market structure wherein industries are dominated or handled by “few” firms. col·lu′sive·ly adv. It may surprise the reader that our definition of non-collusion allows correlation of the the sellers’ behavior. A-Level Economics revision section covering Collusive and Non-Collusive Oligopolies, Price Fixing and Collusion, Price Leadership and Collusion, Non-Collusive Oligopoly, Oligopolies, Non-Price Competition and Price Wars Entry Barriers. Strategic behavior refers to the actions and decision-making processes of individuals or firms in an oligopolistic market, where the decisions of one player significantly impact the outcomes of other players. Study collusion examples and see the definitions for price leadership and price Definition of collusive in the Definitions. e. Collusive and Non-collusive oligopoly Collusive oligopoly refers to the type of oligopoly where rms agree to restrict output or x the price, in order to limit competition, increase market power (monopoly power) and increase pro ts. This structure often leads to strategic interactions among firms, where the actions of one firm can greatly affect the others. In the world of economics, collusion is often seen as a type of anti-competitive behavior that is detrimental to the free market. Objective: The primary goal is to maximize joint profits by avoiding competitive pressures. The former is easily understood as a credible threat will ensure no deviations are made, and the latter is related with how much does each party value the profits obtained from the results of following a collusive strategy, compared to the possible profits of changing their strategy. Along with that you will also get to know the meaning and models of the two forms of oligopoly. Definition of collusive. This strategy involves coordination on low observable prices and high unobservable prices. Use of game theory and interdependence. U. Jul 4, 2024 · Markets in which only a few sellers or suppliers dominate are oligopolies. ef7dka sip2e hdu k3u7u hl zdxqdla xgb5d7 bov or6ctdj 11kz