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Dredgers, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Excavators Company, another Georgia firm. The two firms agree that Excavators will operate in southern Georgia and Dredgers will operate in northern Georgia. This is ____.

(A) a group boycott.

(B) a market division.

(C) a price-fixing agreement.
(D) a tying arrangement.

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Answer: Market division

Explanation: When two major competing firms in an industry divide the market among themselves, then such division is called market division.

Market division is done by firms to prevent loosing of customers due to irrelevant competition. Under this scheme firms divide customers on the basis of geography, scale or any other type. In the given case it is done by geographical area .

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