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21.3: Price Fixing
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- What is price fixing and how does it work?
- Price fixing, which is called bid rigging in a bidding context, involves a group of firms agreeing to increase the prices they charge and restrict competition against each other.
- The most famous example of price fixing is probably the Great Electrical Conspiracy in which GE and Westinghouse fixed the prices of turbines. The companies used the phase of the moon to determine the winner of government procurement auctions.
- Theoretically, collusions should be easy to sustain; in practice, it does not seem to be.