Collusion and Cartel Problems in the Case of Symmetric and Asymmetric Firms

In this context, the issue of symmetric and asymmetric firms, as related to collusion and cartel problems has been examined thoroughly in the literature but also in the empirical field. The results of the relevant studies have shown that the phenomena of collusion and cartel are rather common in the corporate area, however, this assumption should not lead to their acceptance in everyday business activities.
The definition of collusion has been proved a difficult task. According to the views of economists (Harrington, 2005) collusion is present when: a) price exceeds some competitive benchmark. b) the optimality of each firms price depends on the anticipated aggressive response of other firms if they were to act differently. c) this anticipated response is not attributable to a change in the other firms environment (or beliefs over that environment).
The above researcher also presented a definition for Concerted practices which were defined (European Court of Justice) as a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition.
Furthermore, a relevant decision of the U.S. Supreme Court (1993) as presented in Harrigton (2005) states that brands of collusion according to antitrust practice are the following one: a) Explicit collusion: Coordination through direct communication. – Legal status: Always illegal. b) Tacit collusion: Tacit collusion … describes the process, not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive level by recognizing their shared economic interests and their interdependence with respect to price and output decisions.

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