When firms follow each other's lead to reduce the level of competition such as GE and Westinghouse did in steam turbines,it is referred to as
A) explicit collusion.
B) a strategic alliance.
C) a mutual service consortium.
D) conscious parallelism.
E) partnering.

Question

Quizplus · Accepted Answer

Conscious parallelism refers to a situation where firms in an industry follow each other's lead in terms of pricing or other strategic decisions, without explicitly colluding or forming a formal agreement. This behavior can reduce competition and increase profits for all firms involved. The example given in the question of GE and Westinghouse cooperating to reduce competition in steam turbines is a classic example of conscious parallelism.

When Firms Follow Each Other's Lead to Reduce the Level