market allocation

Market allocation occurs when competing businesses agree to divide markets among themselves, such as territories or customer groups. This can lead to higher prices and less competition, as each company avoids competing within its assigned area. While it may seem beneficial for the companies involved, market allocation is typically illegal under antitrust laws because it limits consumer choice and can harm innovation. Essentially, it restricts the free market by preventing businesses from competing fairly against one another, which might ultimately lead to lower prices and better products for consumers.