What term is used to describe an agreement between firms to set prices?

The term used to describe an agreement between firms to set prices is collusion. In the context of economics, collusion occurs when competing companies come together to make arrangements that affect prices or market conditions. This can involve setting a fixed price for goods or services rather than allowing the market to dictate prices through competition. Collusion is often seen as anti-competitive behavior and is typically illegal in many jurisdictions because it undermines the principles of fair competition, potentially leading to higher prices and reduced consumer choice.

The other terms provided refer to different concepts. Price competition focuses on firms competing against each other primarily through pricing strategies rather than agreeing on prices. Market regulation involves government intervention to maintain fair competition and protect consumers, which contrasts with the unregulated nature of collusion. Cooperative pricing might suggest a non-binding agreement to align prices peacefully, which does not accurately capture the formal and mutually agreed upon strategies that characterize collusion.