Difference between revisions of "Collusion"

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Or [[Barriers to entry]] into a market or industry.</ref> In the [[United States]] it is [[illegal]] under the [[Sherman Anti-Trust Act]].
 
Or [[Barriers to entry]] into a market or industry.</ref> In the [[United States]] it is [[illegal]] under the [[Sherman Anti-Trust Act]].
  
Typically, collusion occurs when a group of large competitors, a cartel, divy up [[market]] share among themselves to gain [[monopoly]] control,<ref>A cartel with monopoly control is sometimes referred to as an [[oligopoly]].</ref> and manipulate prices and profitability to make it impossible for a start-up competitor to gain market access.<ref>[[Adam Smith]] said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a [[conspiracy]] against the public, or in some contrivance to raise prices." https://www.econlib.org/library/Enc/Cartels.html</ref> Thus, the public is denied the benefits of lower prices and improvements that come with time. It's also called "price rigging" or "unfair competition."
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Typically, collusion occurs when a group of large competitors, a cartel, divy up [[market]] share among themselves to gain [[monopoly]] control,<ref>A cartel with monopoly control is sometimes referred to as an [[oligopoly]].</ref> and manipulate prices and profitability to make it impossible for a start-up competitor to gain market access.<ref>[[Adam Smith]] said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a [[conspiracy]] against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with [[liberty]] and [[justice]]. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." https://www.econlib.org/library/Enc/Cartels.html</ref> Thus, the public is denied the benefits of lower prices and improvements that come with time. It's also called "price rigging" or "unfair competition."
  
 
The [[OPEC]] cartel is an example of competitors in an industry colluding together to limit production and set prices. Each member agrees to a production quota which, cummulatively, sets the world price. If a member exceeds its production quota, it has the effect of driving down the world price and profitability of all members. If all members exceed their quota, a price war erupts from which some members may not survive.
 
The [[OPEC]] cartel is an example of competitors in an industry colluding together to limit production and set prices. Each member agrees to a production quota which, cummulatively, sets the world price. If a member exceeds its production quota, it has the effect of driving down the world price and profitability of all members. If all members exceed their quota, a price war erupts from which some members may not survive.
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==History of the term==
 
==History of the term==
  
The term "collusion" entered the popular lexicon with the publication of Ira Tarbell's ''History of Standard Oil'', as a buzzword used by [[populist]]s to describe nefarious activities of the super-rich in the late 19th and early 20th century. It became a smear word to promote [[class warfare|class envy]] without those using it having to understand or define specifically what it is.
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The term "collusion" entered the popular lexicon with the publication of Ida Tarbell's ''History of Standard Oil'',<ref>https://www.smithsonianmag.com/history/the-woman-who-took-on-the-tycoon-651396/</ref> as a buzzword used by [[populist]]s to describe nefarious activities of the super-rich in the late 19th and early 20th century. It became a smear word to promote [[class warfare|class envy]] without those using it having to understand or define specifically what it is.
  
[[John D. Rockefeller]] was notorious for colluding with railroads to deny competitors transport of their product, rigging prices, and drive mom n' pop oil producers out of business. He was accused of unfair trade practices. For this, a body of [[Antitrust]] law grew up.
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[[John D. Rockefeller]] was notorious for colluding with railroads to deny competitors transport of their product,<ref>In other words, he would pay railroads more, above market price, to transport his oil and deny service to smaller competitors. The volume of his product allowed him to operate on a slim profit margin. Even if a smaller competitor could pay the artificial higher transport fees created by Rockefeller's collusion with the railroads, it wiped out their profit. Ultimately, the smaller companies had to sell out to Rockefeller, making Standard Oil even bigger and more monopolistic. Once all competition is eliminated, Rockefeller than could raise prices and gouge the public at will.</ref> and drive mom n' pop oil producers out of business. He was accused of unfair trade practices. Rockefeller held most all of his assets in [[Trust]]. For this, a body of [[Antitrust]] law grew up.
  
 
==Tech company collusion==
 
==Tech company collusion==

Revision as of 13:38, 8 August 2018

Collusion, in economics, is an agreement among members of a cartel in a particular industry not to compete in order to create artificial disincentives for new competitors.[1] In the United States it is illegal under the Sherman Anti-Trust Act.

Typically, collusion occurs when a group of large competitors, a cartel, divy up market share among themselves to gain monopoly control,[2] and manipulate prices and profitability to make it impossible for a start-up competitor to gain market access.[3] Thus, the public is denied the benefits of lower prices and improvements that come with time. It's also called "price rigging" or "unfair competition."

The OPEC cartel is an example of competitors in an industry colluding together to limit production and set prices. Each member agrees to a production quota which, cummulatively, sets the world price. If a member exceeds its production quota, it has the effect of driving down the world price and profitability of all members. If all members exceed their quota, a price war erupts from which some members may not survive.

When the government grants protection or assents to collusion and monopoly control by not enforcing anti-Trust laws, it is referred to as "corporate cronyism."

History of the term

The term "collusion" entered the popular lexicon with the publication of Ida Tarbell's History of Standard Oil,[4] as a buzzword used by populists to describe nefarious activities of the super-rich in the late 19th and early 20th century. It became a smear word to promote class envy without those using it having to understand or define specifically what it is.

John D. Rockefeller was notorious for colluding with railroads to deny competitors transport of their product,[5] and drive mom n' pop oil producers out of business. He was accused of unfair trade practices. Rockefeller held most all of his assets in Trust. For this, a body of Antitrust law grew up.

Tech company collusion

In August 2018 the large tech firms Apple, Facebook, Google and others, colluded, in the space of 12 hours, to deny InfoWars access to social media. InfoWars was a fast rising Media Production site surpassing the BBC and other large News and Media sites in viewership and market share in November 2016.[6] It's official APP was ranked #4 in Apple's App Store, above CNN (#6), Google News (#5), Buzzfeed (# 10), Fox News (#7), The New York Times (#11), ABC (#19), and BBC (#26) at the time Silicon Valley tech giants colluded together to destroy it.[7]

See also

References

  1. Or Barriers to entry into a market or industry.
  2. A cartel with monopoly control is sometimes referred to as an oligopoly.
  3. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." https://www.econlib.org/library/Enc/Cartels.html
  4. https://www.smithsonianmag.com/history/the-woman-who-took-on-the-tycoon-651396/
  5. In other words, he would pay railroads more, above market price, to transport his oil and deny service to smaller competitors. The volume of his product allowed him to operate on a slim profit margin. Even if a smaller competitor could pay the artificial higher transport fees created by Rockefeller's collusion with the railroads, it wiped out their profit. Ultimately, the smaller companies had to sell out to Rockefeller, making Standard Oil even bigger and more monopolistic. Once all competition is eliminated, Rockefeller than could raise prices and gouge the public at will.
  6. https://www.infowars.com/infowars-surges-31-spots-in-media-site-rankings-in-one-month/
  7. https://www.infowars.com/infowars-official-app-jumps-to-number-4-dominates-cnn-nyt-abc/