Direct collusion between businesses to restrict competition in the United States is illegal, but it certainly happens. One form of cooperation is through tacit collusion where firms have an understanding to avoid competition. We see this in the steel, auto, airline and other industries where the industry often exhibits price leadership . For example, when an airline announces a fare cut, their competitors immediately match the rate. From there, fares are allowed to move upward with little fanfare until the next slow period, when rate cuts are once again temporarily enacted.
Price leadership implies that one firm in the industry sets prices and the other move in unison.
If a gas station in a cluster changes its price per gallon, the others soon match the change in price. How effective firms are in maintaining oligopolistic and anti-competitive behavior depends on the ease of entry for new firms into the industry. The auto industry has maintained good discipline due to the prohibitive cost of entry into the industry. In contrast, the airline industry has occasionally disintegrated into debilitating price wars as new firms can quickly establish a market share in certain routes. A legal way to restrict competition and limit entry into an industry is to form a cartel .