Conscious parallelism
Encyclopedia
Conscious parallelism is a term used in competition law
to describe price-fixing between competitors in an oligopoly
that occurs without an actual spoken agreement between the parties. Instead, one competitor will take the lead in raising prices. The others will then follow suit, raising their prices by the same amount, with the unspoken mutual understanding that all will reap greater profits from the higher prices so long as none attempts to undercut
the others.
This practice, like most anticompetitive practices, can be harmful to consumers who, if the market power of the firm is used, can be forced to pay monopoly prices for goods that should be selling for only a little more than the cost of production. Nevertheless, it is very hard to prosecute because it occurs without producing any evidence of collusion between the competitors.
The term has also been used to describe industrywide assumption of terms other than price. For example, all competitors in an industry might make only long-term leases of products such as heavy machinery, leaving lessors with no opportunity to make a short-term lease of that product from any competitor.
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
to describe price-fixing between competitors in an oligopoly
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
that occurs without an actual spoken agreement between the parties. Instead, one competitor will take the lead in raising prices. The others will then follow suit, raising their prices by the same amount, with the unspoken mutual understanding that all will reap greater profits from the higher prices so long as none attempts to undercut
Predatory pricing
In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices...
the others.
This practice, like most anticompetitive practices, can be harmful to consumers who, if the market power of the firm is used, can be forced to pay monopoly prices for goods that should be selling for only a little more than the cost of production. Nevertheless, it is very hard to prosecute because it occurs without producing any evidence of collusion between the competitors.
The term has also been used to describe industrywide assumption of terms other than price. For example, all competitors in an industry might make only long-term leases of products such as heavy machinery, leaving lessors with no opportunity to make a short-term lease of that product from any competitor.