Tacit collusion is more likely when firms produce and sell ________ products or services.

Question

Quizplus · Accepted Answer

Tacit collusion is more likely to occur when firms produce and sell similar products or services because they compete directly with each other. In such a scenario, each firm may realize that increasing prices or reducing output could benefit all the firms in the market, which then leads to tacit collusion. On the other hand, if firms produce and sell dissimilar or diverse products, they may not be in direct competition with one another and may not have an incentive to collude.

Tacit Collusion Is More Likely When Firms Produce and Sell