Suppose that Walmart buys fresh roses from several hundred small backyard gardeners in California.These gardeners are very likely to be able to engage successfully in tacit collusion.

Question

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Tacit collusion is more feasible in markets with a small number of firms, high barriers to entry, and homogeneous products. Given the large number of small backyard gardeners, coordinating behavior without explicit communication (tacit collusion) would be very challenging due to the diversity in production capabilities, costs, and the difficulty in monitoring and enforcing any sort of agreement among a large number of participants.

Suppose That Walmart Buys Fresh Roses from Several Hundred Small