Kinked demand potentially fosters
Kinked demand potentially fosters supra-competitive prices because any one firm would receive a reduced benefit from cutting price, as opposed to the benefits accruing under neoclassical theory and certain game theoretic models such as Bertrand competition. Indicators Practices that suggest possible collusion include:
Uniform prices A penalty for price discounts Advance notice of price changes Information exchange Examples Collusion is largely illegal in the United States, Canada and most of the EU due to competition/antitrust law, but implicit collusion in the form of price leadership and tacit understandings still takes place. Several examples of collusion in the United States include: Market division and price-fixing among manufacturers of heavy electrical equipment in the 1960s, including General Electric.