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A '''cartel''' is an group of companies in a particular industry who agree not to undercut each other in prices and/or carving up the market and restricting the amount of output they produce. It is particularly common when there is an [[oligopoly]]. The aim of such [[collusion]] is to increase profit by reducing competition. Identifying and breaking up cartels is an important part of the competition policy overseen by [[antitrust laws]] in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to [[collude]] on paper. The desire to form cartels is strong; however, most cartels are unstable.

A '''cartel''' is an group of companies in a particular industry who agree not to undercut each other in prices and carving up the market territory. They restrict the amount of output they produce to stabilize prices and maintain profit margins. It's particularly common when there is an [[oligopoly]]. The aim of such [[collusion]] is to stabilize and increase prices and profit by reducing competition.  

 

Identifying and breaking up cartels is an important part of the competition policy overseen by [[antitrust laws]] in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to [[collude]] on paper. The desire to form cartels is strong; however, most cartels are unstable.

[[OPEC]] is one example of a large [[globalism|global]] cartel; if one member of the cartel breaks the agreement on price fixing, it's not just an oil company that risks [[bankruptcy]] in a price war, but a whole country.

[[OPEC]] is one example of a large [[globalism|global]] cartel; if one member of the cartel breaks the agreement on price fixing, it's not just an oil company that risks [[bankruptcy]] in a price war, but a whole country.