Final answer:
Companies engage in collusion by forming a cartel within an oligopoly to control prices and maximize profits, although this practice is illegal in many parts of the world. Option A is correct.
Step-by-step explanation:
The term collusion refers to the scenario where a group of companies join together, merge their stocks into a single entity, and allow a central board to determine prices and production costs with the goal of eliminating competition.
This behavior is characteristic of an oligopoly, where a few companies have a large market share and can act as a monopoly to maximize their profits, often by means of forming a cartel. However, such practices are generally illegal in many parts of the world, including the European Union and the United States, because they disrupt free-market competition.
Several competing corporations might join together in an association for various reasons. Firstly, there is strength in numbers, and secondly, they often face common industry issues that can impact all members. Lastly, they can collectively influence and benefit from governmental policies. Therefore, the correct answer to why several competing corporations join together is d. all of the above.
They collaborate for strength in numbers, to address common industry issues, and to benefit from government policies.