| dc.description.abstract | In a spate of recent cases, the courts and the Fair Trade Commission (“FTC”) have difficulity regulating the cases of price leadership among competitors in olipolistic markets. Indeed, courts and FTC have condemned such concerted action in violation of the Fair Trade Law (“FTL”). The high levels of concentration in many Taiwan markets guarantee that tacit collusion will be continuing problem, however, how government proved coordinated interaction to assess the likelihood for tacit collusion in oligopoly Chinese Petroleum Co.and Formosa Platistic Co. raised or reduced gasoline prices simultaneously, the action was described the means by which firms in gasoline markets are able to manage the price having to enter into an unexpressed agreement. Tacit collusion, like express agreement, should be illegal on its face under Article 7 of FTC. However, the court need inquire into the specific economic evidence on the existence of meeting of mind.
This article argues that courts recognizing price leadership is illegal because neiher courts nor FTC have explicitly grounded their analysis in modern oligopoly theory, which is the rational basis for evaluating economic evidence on the existence of collusion. In this regard, traditional models and game theory demonstrates that the mutually price and quantity constitute Nash equilibrium without agreements. Each party’s dominant strategy is to meet profit-maximizing, then is doing the best it can in setting a price and quantity. Each party independently reactions the same way.
This study aimed to analyze the current economic theory to find out the predicament in practical operations. Furthermore, this paper briefly discuss Chinese Petroleum Co. and Formosa Platistic Co. cases, then provided a brief conculsion that summarized some of implication of proposed approaches. | en_US |