“The Internet makes it easy for everyone to compare prices – not just the buyers, but sellers, too. Businesses check prices with search engines that are just as good as any consumer’s, and they probably use the tools more often. Once businesses see competitors’ pricing, they may react instantly – but not necessarily in ways that will lead to price cuts. Instead, businesses with great knowledge of each other often engage in what economists call ‘tacit collusion.’ The concept states that companies come to recognize how intertwined they are with one another, especially when they interact over and over. The belief is that businesses will maintain noncompetitive prices, even if they don’t explicitly collude . . . Sure, some small, new competitor can come in and undercut the bigger producers or retailers for a while. But the leading players, those with a strong customer base and brand name, behave as though they believe in the Cold War doctrine of ‘mutually assured destruction.'”
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