Difference between revisions of "Cartel"
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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 carve up the market territory. They restrict the amount of output they produce to stabilize prices and insure profit margins. The net result is an [[oligopoly]]. The aim of such [[collusion]] is to maintain | + | A '''cartel''' is an group of companies in a particular industry who agree not to undercut each other in prices and carve up the market territory. They restrict the amount of output they produce to stabilize prices and insure profit margins. The net result is an [[oligopoly]]. The aim of such [[collusion]] is to maintain 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. | 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. | ||
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| + | Another examples is the [[monopolist]] practices of [[Big Tech]]. Big tech has led a war on constitutional freedoms since the election of [[President Donald J. Trump]]. Bug Tech colluded to destroy the [[free speech]] platform [[Parler]]. | ||
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 06:04, January 13, 2021
A cartel is an group of companies in a particular industry who agree not to undercut each other in prices and carve up the market territory. They restrict the amount of output they produce to stabilize prices and insure profit margins. The net result is an oligopoly. The aim of such collusion is to maintain 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 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.
Another examples is the monopolist practices of Big Tech. Big tech has led a war on constitutional freedoms since the election of President Donald J. Trump. Bug Tech colluded to destroy the free speech platform Parler.
The 21st century saw a rise in illegal drug and human slavery cartels, particularly in Mexico.