Tacit collusion exists when two or more firms coordinate their production and pricing strategies indirectly by agreeing a production and pricing decisions of other firms. Usually this can lead to under production and prices above the competitive levels. This are more common in the oligopoly markets where there are mainly two major competitive organizations.
The healthcare market in Greater Memphis area has about six major players but the two large companies, Baptist Healthcare and Methodist healthcare controls most of the market share. In a real sense, this should create an Oligopoly market where they both can dictate the price. But in USA, healthcare market rates are partially dictated by CMS (Center for Medicare and Medicaid services), private insurances and organizations like AMA (American Medical Association) and others. In rural areas, where there are monopoly, healthcare can negotiate special rates with the insurance companies but in urban areas, where the market is more open and competitive, tacit collusion is minimal.
Disclaimer: Opinions expressed are solely personal and do not express the views or opinions of any other person or entity.
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