It's standard oligopoly behaviour to charge the same (or similar) prices for the same product.
Oligopolies, unlike other firms, are concerned with individual market share. If one firm drops its price, it will capture a greater market share unless all others follow suit. Ofcourse the rogue firm potentially will be earning a lower profit, but thats ok in the short term until it captures enough market share (theoritically it could capture all of it). Now, if one firm raises its price, all other firms can either choose to raise their own prices and earn a greate profit, or leave their prices as they are an cannibalise the rogue firm's market share. Often these decisions hinge on what is better long term for each firm.
Anyway, while this may seem like "price fixing" it's not. Firms don't meet and discuss what prices to set, they simply react to what other firms do.
__________________
I can read your mind... looking at you... I can read your mind...
|