Difference between revisions of "Cartel"
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A '''cartel''' is an agreement among two or more firms in the same industry to co-operate in fixing 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 agreement among two or more firms in the same industry to co-operate in fixing 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. | ||
| − | [[OPEC]] is one example of a large [[global]] cartel; if one member of the cartel breaks the agreement on price fixing, it's not just an oil company that risks | + | [[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. |
The [[21st century]] saw a rise in [[illegal drug]] and human [[slavery]] cartels, particularly in [[Mexico]]. | The [[21st century]] saw a rise in [[illegal drug]] and human [[slavery]] cartels, particularly in [[Mexico]]. | ||
Revision as of 21:32, August 8, 2018
A cartel is an agreement among two or more firms in the same industry to co-operate in fixing 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.
OPEC is one example of a large 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.
The 21st century saw a rise in illegal drug and human slavery cartels, particularly in Mexico.