In this chapter, it talks about explicit collusion and tacit collusion and how it enables a firm to exploit the environmental opportunity of avoiding rivalry. Explicit collusion is usually illegal and occurs when various companies who collaborates and openly negotiate the amount of supplies being produce and the prices for those supplies to eliminate other businesses or companies in the same market. The reason why this is illegal because it can create a monopoly within the community and can cause the small businesses to go out of business. This is why Rite Aid and other pharmacies have establish a mark up rate and the amount they can charge the insurance companies. In addition, there was a law that was created to prevent explicit collusion by telling pharmacies to ALWAYS give the customer the generic drug because it is cheaper, unless the doctor or the patient insisted on the brand name.
On the other hand, the legal way is doing the tacit collusion, which mean Rite Aid and other pharmacies have to infer and keep a check on the prices.
Alan's Perspective 