Check Your Understanding

1. Question

   For each of the following industry practices, explain whether the practice supports the conclusion that there is tacit collusion in this industry.

   1. For many years the price in the industry has changed infrequently, and all the firms in the industry charge the same price. The largest firm publishes a catalog containing a “suggested” retail price. Changes in price coincide with changes in the catalog.

   2. There has been considerable variation in the market shares of the firms in the industry over time.

   3. Firms in the industry build into their products unnecessary features that make it hard for consumers to switch from one company’s products to another’s.

   4. Firms meet yearly to discuss their annual sales forecasts.

   5. Firms tend to adjust their prices upward at the same times.