> I'm saying that the independent distributors of gasoline have no monoply on the market, but still manage to ensure that they all get the same cut anyways. There's nothing stopping them all from agreeing to fix the market far above what the price could be because they see an opportunity for profit.
Except for the fact that
(a) it's completely illegal
(b) every individual player has an incentive to undercut the others and profit, making the collusion unstable
The second is actually more significant than the first, because even if it weren't illegal, this setup would break apart pretty quickly at scale. (That bears out in practice: collusion with many parties tends to be unstable in the long run, and usually is only successful as long as the colluding parties can find a separate motivation to justify the collusion).
> And yet, cartels and illegal price fixing occurred pretty often in history.
There's a lot of research that's gone into this. Cartels (specifically multiparty cartels organized around price fixing) have rarely been stable for extended periods of time. The exceptions are usually either
(1) Domestic cartels which are able to gain the backing of the (nation-state) government that has jurisdiction over them
(2) Cartels which are able to find a separate motivation shared by all parties to justify the collusion
The first case is obviously not applicable to what we're talking about here. The second is what I already mentioned, and it's pretty rare (and not applicable to this situation either).
Except for the fact that
(a) it's completely illegal
(b) every individual player has an incentive to undercut the others and profit, making the collusion unstable
The second is actually more significant than the first, because even if it weren't illegal, this setup would break apart pretty quickly at scale. (That bears out in practice: collusion with many parties tends to be unstable in the long run, and usually is only successful as long as the colluding parties can find a separate motivation to justify the collusion).