Which type of collusion involves direct negotiations?

Which type of collusion involves direct negotiations?

• A. Tacit collusion
• B. Explicit collusion
• C. Covert collusion
• D. Collaborative competition

Answer: (B)

Explicit collusion is characterized by direct, overt negotiations or agreements between firms aimed at coordinating their actions, typically to control prices or limit competition. Unlike tacit collusion, where companies indirectly coordinate their strategies without formal agreements—often through mutual understanding or observation—explicit collusion involves clear communication and a mutual agreement among the parties involved. This type of collusion can lead to anti-competitive practices, such as price fixing, which is illegal in many jurisdictions. Therefore, the correct identification of explicit collusion highlights the importance of recognizing when companies directly engage in cooperative strategies to influence market behavior.

Explicit collusion is characterized by direct, overt negotiations or agreements between firms aimed at coordinating their actions, typically to control prices or limit competition. Unlike tacit collusion, where companies indirectly coordinate their strategies without formal agreements—often through mutual understanding or observation—explicit collusion involves clear communication and a mutual agreement among the parties involved. This type of collusion can lead to anti-competitive practices, such as price fixing, which is illegal in many jurisdictions. Therefore, the correct identification of explicit collusion highlights the importance of recognizing when companies directly engage in cooperative strategies to influence market behavior.