What is a potential outcome of an anti-competitive agreement?

Anti-competitive agreements often lead to reduced market innovation as they can create barriers for new entrants and stifle competition. When companies collude or engage in practices to limit competition, they can prioritize maintaining their current market position over investing in research and development. As a result, innovation tends to decline because firms may feel less pressure to develop new products or improve existing ones when competition is restricted. This lack of competitive pressure can also result in a stagnation of ideas and technological advancement in the market, ultimately hurting consumers who benefit from innovations and improvements in product offerings.

In contrast, increased competition typically drives innovation, as companies strive to differentiate themselves and attract consumers. Similarly, lower prices and enhanced product variety are often the results of healthy competition, not anti-competitive behavior. Therefore, the significant impact of anti-competitive agreements on limiting innovation makes this the correct answer.