What is collusion, and why is it often illegal?

• A. Collusion is a legal joint venture where firms merge assets to lower costs; it is often illegal because it reduces firms' ability to innovate.
• B. Collusion is when firms independently adopt similar pricing strategies due to market conditions; it is often illegal because it burdens small firms.
• C. Collusion is a government-approved agreement to stabilize markets during crises; it is often illegal because it conflicts with free-market principles.
• D. Collusion is an agreement among firms to coordinate prices, outputs, or market shares to reduce competition and increase joint profits; it is often illegal because it raises consumer prices and violates antitrust laws.

Answer: (D)