There are laws against colusion(sp?). I'd be nice if everone banded together to inflate prices to a liveable amount, but then you run afoul with the law. Also economics points out that there will always be someone that undercuts eventually to gain more market share. When this happens, everything falls right back to where you were before banding together.
I agree, you can put yoursef out of business with price wars, or clueless bidding. Just need to thin the herd and with fewer shops, prces will rise.