Means that an understanding has developed between two or more competing firms, but without any kind of personal contact or formal agreement. It is characteristic of an oligopoly . The sellers will simply not take action in any way which might increase the level of competition between them. Because there is no actual agreement, this is hard to prevent, even though it may have considerable impact on the buyer. It is possible for a long period of tacit collusion to follow a price war which the participants have found very damaging. They may just set their prices at similar levels and avoid further price competition.