American Public University
Collusion is possible in any market because the perfect competition market assumptions are not realistic, and some companies might find opportunities to get the monopoly power in the market. In the toy market, the three big players have dominated the other players in the international markets, and they have arranged hidden agreements among themselves for fixing the prices in the particular geographically separated markets. Also, they have shared the markets thematically.
The three companies were working at the large scales, and they have developed the new production technologies. In another word, these three companies have the knowledge of production to which the other rivals with the small scales cannot reach. The advantage of having valuable information in the market has provided them the opportunity to increase their market shares in time. Finally, they have achieved a high level of monopoly power in the international market. By making a secret agreement between them, they could create a kind of monopoly in the international markets.
The collusive behavior occurs because of the growing policies of the companies. Companies have shareholders, and they need to prove that the company is managed well. Because of that, every company tries to increase their market share, and sometimes they might collude.
The government is responsible for protecting the competition in all markets, with a few exceptions like national security services market. Considering that these three companies are originated from the UK and the US, these countries' governments are politically supporting some international businesses for increasing their political and economic power in the world. The governments probably were aware that the global toy market is being converted into an oligopoly. The intervention or the inspection to these companies was a bit late. The companies probably will continue their oligopolistic behaviors. Considering that the US and the UK economy still suffers from the global financial crisis, it is possible to see that the US and the UK ignore many cases in the international markets about creating an oligopoly in the favor of the UK and the US.
