Cartels and Collusion: Can Opec agree to raise the oil price?

A classic example of cartels directly influencing market prices.

http://www.bbc.co.uk/news/business-38137125

Can you illustrate this situation with an appropriate diagram?

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Price Fixing and Collusion

A great article from The Guardian discussing recent examples of collusion. Some further video resources from the CMA here.

Read the article and work together to answer this question:

The European Commission prevents mobile phone networks from colluding on ‘roaming charges’ when consumers travel around Europe. Meanwhile, the EU has forced mobile phone manufacturers to cooperate in making a single design of phone charger.

Evaluate the view that governments should never intervene to influence how oligopolists collude or cooperate on such issues as fixing prices, varying output, conducting research, developing products, or carrying out any other aspect of their business.

25 marks

 

Collusion: Examples of Price Fixing

Building on our recent study of oligopoly markets and game theory, here’s a great example of price fixing in action:

Take a look at these examples and summarise two of them for discussion in class:

http://www.tutor2u.net/economics/blog/oligopoly-recent-examples-of-price-fixing-behaviour

  1. What collusive behaviour occurred?
  2. What was the potential benefit to the firms, and the impact on consumers?
  3. What was the outcome?

Thanks to Sasha and Louisa for this example:

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