Editing Collusion (section)

== Conditions conducive to collusion ==
There are several industry traits that are thought to be conducive to collusion or empirically associated with collusion. These traits include:

* '''High market concentration:''' High market concentration refers to a market with few firms, which makes it easier for these firms to collude and coordinate their actions.<ref name="Characteristics of Collusive Firms">{{Cite journal |last1=Asch |first1=Peter |last2=Seneca |first2=Joseph J. |date=1975 |title=Characteristics of Collusive Firms |url=https://www.jstor.org/stable/2097944 |journal=The Journal of Industrial Economics |volume=23 |issue=3 |pages=223–237 |doi=10.2307/2097944 |jstor=2097944 |issn=0022-1821}}</ref>
* '''Homogeneous products:''' Homogeneous products refer to products that are similar in nature, which makes it easier for firms to agree on prices and reduces the incentive for firms to compete on [[product differentiation]]<ref name="Characteristics of Collusive Firms"/>
* '''Stable demand and/or excess capacity:''' Stable demand and capacity implies predictability and therefore demand and capacity does not fluctuate significantly, which makes it easier for firms to coordinate their actions and maintain a collusive agreement.<ref>Harrington, J. (2015). Some Thoughts on Why Certain Markets are More Susceptible to Collusion.</ref> This can also refer to a situation where firms have more production capacity than is needed to meet demand.<ref>{{Citation |title=Excess capacity and collusion |date=1995 |url=https://www.cambridge.org/core/books/competition-policy/excess-capacity-and-collusion/97E07C97D1DD8ED8486503D6F4E74B62 |work=Competition Policy: A Game-Theoretic Perspective |pages=151–172 |editor-last=Phlips |editor-first=Louis |access-date=2023-04-04 |place=Cambridge |publisher=Cambridge University Press |doi=10.1017/CBO9780511522055.010 |isbn=978-0-521-49871-5|hdl=10419/221034 |hdl-access=free }}</ref>