Question

What is conscious parallelism? Is this explicit or tacit collusion?

Answer 1

Conscious parallelism is a term used in competition law to describe pricing strategies among competitors in an oligopoly that occurs without an actual agreement between the players.Instead, one competitor will take the lead in raising or lowering prices. The others will then follow suit, raising or lowering their prices by the same amount, with the understanding that greater profits result.Conscious parallelism, sometimes called tacit collusion, occurs where firms adopt their business practices based on what other firms are doing, rather than competing for customers. The most obvious manifestation occurs where prices across companies in an industry not only become suspiciously similar, but also change rapidly in strikingly parallel ways. Suggested examples are legion and varied: airline tickets, gasoline, cellular phone text messaging and roaming rates, interest rates on bank accounts, credit card interchange fees, movie tickets, recorded music