Collusion Industry Attributes
This chapter is a little bit difficult to talk about in terms of Carnival Cruise Line and Cooperation or Collusion because I have no idea if they do either. However, I can speak on the industry attributes that facilitate the development and maintenance of collusion if it were to happen in this industry.
First is the small number of firms in an industry. This is partially true. While there are a large number of cruise lines, there are a small number of main ones everyone takes. These are Carnival, Royal Caribbean, and Norwegian. When looking at product homogeneity, this is true as well. All cruises are similar. The difference usually comes in how exquisite each one is. Carnival is probably the most affordable while Royal is the most expensive and nicest. While the prices different, cost homogeneity is similar as well. All three of the top cruise lines have different prices, but they aren't so different that it makes a huge difference in selection for cruisers.
The next is price leaders. Carnival is not the price leader, but they do have enough of the market share to compete. As stated before, they sit with the top three cruise lines in the market. I do believe there is an industry social culture that could lead to collusion. So many people switch from cruise line to cruise line as they are headquartered in similar areas and have similar goals/talent needs. In terms of high order frequency and then large inventories, I think both of those occur for every single top cruise line. The last part, entry barriers already happens. It is hard for people to enter the market due to one, capital, and two, the needs for ports, which Carnival, Royal, and Norwegian mainly control. When looking at all of these factors, it makes it seem like there could be opportunities for collusion if multiple parties agreed to it.
First is the small number of firms in an industry. This is partially true. While there are a large number of cruise lines, there are a small number of main ones everyone takes. These are Carnival, Royal Caribbean, and Norwegian. When looking at product homogeneity, this is true as well. All cruises are similar. The difference usually comes in how exquisite each one is. Carnival is probably the most affordable while Royal is the most expensive and nicest. While the prices different, cost homogeneity is similar as well. All three of the top cruise lines have different prices, but they aren't so different that it makes a huge difference in selection for cruisers.
The next is price leaders. Carnival is not the price leader, but they do have enough of the market share to compete. As stated before, they sit with the top three cruise lines in the market. I do believe there is an industry social culture that could lead to collusion. So many people switch from cruise line to cruise line as they are headquartered in similar areas and have similar goals/talent needs. In terms of high order frequency and then large inventories, I think both of those occur for every single top cruise line. The last part, entry barriers already happens. It is hard for people to enter the market due to one, capital, and two, the needs for ports, which Carnival, Royal, and Norwegian mainly control. When looking at all of these factors, it makes it seem like there could be opportunities for collusion if multiple parties agreed to it.
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