A silicon chip manufacturer agreed to purchase computers from a computer firm that buys its silicon chips from the first firm. After the agreement, neither of the two companies bought from outside competitors, thereby closing off the markets of the two firms. This is an example of _____.

Question

Quizplus · Accepted Answer

Two anticompetitive effects can occur from conglomerates: reciprocity and entrenchment. Reciprocity occurs when one firm agrees to purchase items from another firm that agrees to purchase products from it.

A Silicon Chip Manufacturer Agreed to Purchase Computers from a Computer