Able Excavators, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Big Machine Company, another Georgia firm. The two firms agree that Able will operate in southern Georgia and Big will operate in northern Georgia. This is

Question

Able Excavators, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Big Machine Company, another Georgia firm. The two firms agree that Able will operate in southern Georgia and Big will operate in northern Georgia. This is​

Quizplus · Accepted Answer

The agreement between Able Excavators and Big Machine Company to operate in different regions of Georgia is a form of market division, where the firms divide the relevant market or customers amongst themselves. This is generally considered illegal under antitrust laws as it reduces competition, but it may be permitted under certain circumstances, such as when it allows firms to achieve greater efficiencies or when it is part of a settlement of antitrust litigation.