how does price fixing work, can’t anyone charge whatever they want for a product?
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In theory, in a pure competitive market, producers will compete between each others until prices have converged to costs, destroying any margin. This is especially true for commodity products without any differentiation.
It’s fun for consumers, but producers don’t want that. So they decide that “sharing” the market between themselves with a “good enough” market share is worth it if it prevents a price war.
“I won’t lower price if you don’t lower yours” is bad for consumers.
It’s illegal for them to just rent a room and discuss pricing strategy, but there’s a lot of more indirect ways to do it:
– don’t compete on a tender in someone’s area
– ruthlessly undercut anyone who dares try in your area
-> after a while competitors get the message and implicitly share the market between themselves
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