Oligopoly

Why tacit collusion?

Tacit collusion is silent non traceable associated with price leadership.Kinked demand curve theory can be used to explain this.

http://www.tutor2u.net/economics/reference/oligopoly-tacit-collusion

Tutor2u has a good summary, case study video and powerpoint worth carefully looking at for the following exam type questions on overt collusion.

Overt or Explicit collusion between firms that is traceable means they have formed a cartel. A  cartel occurs when 2 or more firms enter into agreements to restrict the supply or fix the price of a good in a particular industry.The most famous example being OPEC (Organisation of Petroleum Exporting Countries). In the 1970s, OPEC tripled the price of oil because they controlled over 70% of the world’s oil supply. In the UK cartels are an example of restrictive trade practices and are illegal. 
- types and why engage in collusion
- what makes it easier
- why it make break down

http://www.tutor2u.net/economics/reference/oligopoly-collusion