How likely is it that the firms can reach a cooperative arrangement and agree to maintain high prices? Below is a partial list of factors which facilitate collusion.

Fewer firms
Fewer decision makers that must agree. It's like deciding what to get on a pizza.. the more people involved the more likely someone is to want Pineapple.
Lax enforcement of anti-trust law
Just like you can tell where there are fewer patrols on a stretch of highway by the average speed you can partially judge anti-trust enforcement efforts by similarity of pricing.
Similar production costs
If one firm has lower production costs than the others it may wish to take advantage of this to increase market share by pricing lower than the others can afford.

Copyright © 1995-2004, Inc. - All Rights Reserved