and Proctor & Gamble a total of €361 million ($484 million). A similar fate befell the icemakers. Bagged ice is a

commodity, a perfect substitute, generally sold in 7- or 22-pound bags. No one cares what label is on the bag. By
agreeing to carve up the ice market, control broad geographic swaths of territory, and set prices, the icemakers
moved from perfect competition to a monopoly model. After the agreements, each firm was the sole supplier of

bagged ice to a region. There were profits in both the long run and the short run. According to the courts: “These

companies illegally conspired to manipulate the marketplace.” Fines totaled about $600,000—a steep fine

considering a bag of ice sells for under $3 in most parts of the United States.

Even though it is illegal in many parts of the world for firms to set prices and carve up a market, the temptation to

earn higher profits makes it extremely tempting to defy the law.

Access for free at openstax.org
10 • Key Terms 253
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