Final answer:
Co-branding is when two established brands collaborate to offer a single product or service that carries both brand names. It differs from bundling, where multiple products are offered together, and from collusion, where firms in an oligopoly work together to control prices and output.
Step-by-step explanation:
When two established brands collaborate to offer a single product or service that carries both brand names, it is defined as co-branding. This approach combines the strengths of two brands to increase the value proposition for consumers and create synergistic effects that benefit both companies. Co-branding is distinct from bundling, where a firm offers multiple products or services as one package, often at a discounted rate. Bundling is common in industries like telecom where companies offer cable, internet, and phone services together.
In the context of competition and market dynamics, such collaborations can be seen as a strategic move to pool resources and achieve a competitive edge. It is, however, different from collusion where firms in an oligopoly might work together to act as a monopoly, potentially leading to strategies such as price fixing, which is illegal in many jurisdictions.