Formal Agreement Among Producers To Set Prices And Output
If companies opt for an agreement, they choose to produce the monopolistic production Qc and calculate a corresponding price, pc, which can be read in the market demand curve. Since they produce together where MR = MC is located, they will maximize the profits of the industry, just like a real monopoly. Therefore, Company A will argue that it makes sense to expand spending if B keeps spending low, and that it is also useful to expand spending if B increases spending. Again, B is faced with a parallel series of decisions that push B to expand publishing. Perhaps the simplest approach for the goodest collusion oligopolists, as you can perhaps imagine signing a contract between them, would be to keep production low and keep prices high. However, if a U.S. group of companies signed such a contract, it would be illegal. Some international organizations, such as the member nations of the Organization of the Petroleum Exporting Countries (OPEC), have signed international agreements to act as a monopoly, keep production low and keep prices high, so that all countries can reap high profits from oil exports. However, such agreements, because they fall within a grey area of international law, are legally unenforceable. For example, if Nigeria decides to lower prices and sell more oil, Saudi Arabia cannot take Nigeria to court and force it to stop.
How did this soap opera end? Following an investigation, French antitrust authorities fined Colgate-Palmolive, Henkel and Proctor & Gamble a total of €361 million ($484 million). . . .