Question

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Decision Point: Strategies for Supporting Tacit Collusion The profit increase is clear now. If you can raise the price of hearing aids to $2,500 and can get Hanvil to do the same, your profit will increase by 14.6 percent. This would be more than enough to satisfy the shareholders. Your team presents a bunch of different options to make tacit collusion more likely. You need to narrow down the choices by selecting the four most viable options. Select the four most viable options from the choices below, and click Submit. ... Direct negotiation 0 0 Price leadership 0 Precommitments 11 Price war Price war Price visibility O Price following Preannouncements Submit

Answer 1

Tacit collusion is when firms in a particular industry come toether and generally decide to not engage in price wars and may also decide on other competitive factors.

In my opinion, four factors to be considered are:

direct negotiation: This will help to reach to common consensus.

price visibility- Prices should be visible to all.

pre announcements: Any pre announcement should be discussed as it can then lead to breaking away from collusion.

pre commitments: same as for pre announcements.

price factors will be negotiated as that is the objective of having a tacit collusion and hence firms will not involve in price leadership, price war or any price following as through negations it can be tackled.