What situation occurs when several brokers agree on a commission rate to be charged for services?

When several brokers agree on a commission rate to be charged for services, this situation is referred to as price fixing. This practice involves competitors coordinating to set prices at a certain level rather than allowing the market to determine them through competition. Price fixing is illegal under antitrust laws because it restricts free market competition and can lead to higher costs for consumers. Instead of allowing brokers to set their own commission rates based on market conditions and individual service value, which encourages healthy competition and innovation, price fixing undermines these principles. It is important for brokers to adhere to ethical practices and legal standards, ensuring that they compete fairly rather than collude on prices.

Collusion, while related, typically refers to any agreement between competitors to limit competition, not solely focused on pricing. Commission sharing involves brokers sharing commissions with one another, which is a different concept. Market allocation pertains to agreements between competitors to divide markets or customers, again distinct from agreements on commission rates.