Tacit Collusion

The problem of cooperation exists becuase firms, simultaneously, have strong incentives to cooperate and strong incentives to cheat on cooperative agreements. Traditional solutions to the problem of cooperation emphasize the role of some central authority, in the form of an individual or institution, in forcing cooperation. The traditional way of examining cooperation in economic models focuses on explicit and tacit collusion. The primary benefit collusion is that firms can establish prices and outputs that jointly maximize their profits. In some circumstances, such joint maximization is a much higher profit alternative than competing, acting as price takers, and earning superior profits.

Marteverick does this similarly with his company Pressed Out Media Group. On some jobs that are too big for just him he will hire someone to shoot for film or photography depending on what the customer wants more of, and because he has to bring in someone else he will work with the partner on what the best price is. Or say if he is too busy to work the full job he will shift it towards another company and the customer will pay the other company but because he was the “sub” he will still make a profit off of the job since he still worked it but wasn’t fully in charge of the project.

At this moment he does not actively pursue collusions with other people in his field but if the job arises he will research and see which option leaves him in the green on earnings.