In the Bertrand model, firm A`s optimal price depends on where it thinks Firm B will set its price. Prices just below the other company receive full market demand, although this choice is not optimal if the other company has prices below marginal costs, as this would result in negative profits. If Company B sets the price below marginal costs, Company A will set the price at the marginal cost. If Company B sets the price above marginal costs, but below the monopoly price, Company A will set the price just below that of Company B. If Company B sets the price above the monopoly price, Company A will set the price at the monopoly level. Cournot duopoly is an economic model that describes an industry structure in which companies compete at the production level. The model assumes that, under U.S. law, price exchange between competitors may also violate cartel law. These include the exchange of prices with the intention of setting prices or the exchange rate which affects the prices set by individual competitors. Evidence that competitors have common prices can be relied upon as evidence of an illegal price agreement. [7] In general, experts advise that competitors avoid agreeing on the price. [8] In the United States, collusion is an illegal practice that greatly discourages its use.

The law of agreements is designed to prevent agreements between companies. This makes it difficult to coordinate and execute an agreement to meet. In addition, in sectors under strict supervision, it is difficult for companies to participate in agreements. An agreement is an agreement between competing companies to obtain higher profits. Agreements generally occur in an oligopolistic industry where the number of sellers is low and the products marketed are homogeneous. Cartel members can agree on price fixing, total industry production, market share, customer distribution, allocation of territories, supply manipulation, creation of common distribution agencies and profit sharing. In 2008 in the United States, LG Display Co., Chunghwa Tubes and Sharp Corp., agreed to plead guilty and pay $585 million in fines[24][25] for conspiracy to fix the prices of lcd boards. Bertrand Duopoly: The diagram shows the reaction function of a company that competes for the price. If P2 (the price set by company 2) is lower than marginal costs, enterprise 1 in marginal prices (P1-MC). If Firm 2 price above MC, but below monopoly prices, company prices 1 just below company 2.

When prices are fixed 2 above the monopoly price (PM), fixed price 1 at the monopoly level (P1-PM). In such a scenario, there are a number of plausible reactions and results. If Coca-Cola lowers their prices, Pepsi can follow up to make sure they don`t lose market share. In this situation, the exodus leads to defeat. In other words, due to the initial price decline due to Coca-Cola (betraying the status quo), both companies are likely to see lower profit margins. On the other hand, despite the Coca-Cola gap, Pepsi managed to maintain the price point by sacrificing market share to Coca-Cola, while maintaining the established price point. Detention dilemma scenarios are difficult strategic choices, as any deviation from established competitive practice may result in a decrease in gains and/or market share. In 2010, the EU fined LG Display 215 million euros for its participation in the LCD pricing system. [27] Other companies have been fined a total of 648.9 million euros, including Chimei Innolux, AU Optronics, Chunghwa Picture Tubes Ltd. and HannStar Display Corp. [28] LG Display stated that it was considering imposing the fine. [29] If prices are set between different firms, this can, to some extent, influence consumer choice and affect the small businesses that depend on these suppliers.

[37] Unlike pricing, pricing is a kind of informal collusion that is generally legal. The price leader, sometimes referred to as ”p price