When rival firms within an industry co-operate for their own mutual benefit i.e. to maximise profits. There are different types of firm collusion such as overt collusion and tacit collusion.
The flowchart below depicts the logical sequence of an example of collusion which is anti-competitive i.e. predatory pricing. This like all forms of collusion is legally prohibited but firms with superior financial resources to other firms have the ability and incentive to collude to protect their market share and position.
