Cartel

Examples of Cartel in the following topics:

• Cartel Example

  • A cartel is a formal collusive arrangement among firms with the goal of increasing profits.
  • A cartel is an agreement among competing firms to collude in order to attain higher profits.
  • Game theory suggests that cartels are inherently unstable, because the behavior of cartel members represents a prisoner's dilemma.
  • Whether members of a cartel choose to cheat on the agreement depends on whether the short-term returns to cheating outweigh the long-term losses from the possible breakdown of the cartel.
  • Assess the role of competition and collusion in the formation of cartels

• Antitrust Laws

  • This revolves largely around avoiding cartels, or collaboration between the big players which would allow for market manipulation.
  • The Sherman Act dealt with avoiding or limiting the power of trusts, or essentially the creation of price-controlling cartels.

• Price Leadership

  • Firms can collude explicitly, as in the case of cartels, but this type of behavior is illegal in many parts of the world.

• Why Governments Intervene In Markets

  • In an unregulated inefficient market, cartels and other types of organizations can wield monopolistic power, raising entry costs and limiting the development of infrastructure.