A cartel is an agreement between businesses or organizations that aims to control the supply and price of goods or services within a particular industry. Cartels are often illegal and are subject to strict anti-trust laws in many countries.
Cartels typically involve members agreeing to restrict output levels, fix prices, divide up markets, and control the entry of new competitors into the market. This can lead to higher prices for consumers, reduced competition, and fewer choices in the marketplace.
There are various types of cartels, including horizontal and vertical cartels. Horizontal cartels involve businesses in the same industry agreeing to fix prices or limit output to maintain high prices. Vertical cartels involve businesses at different stages of the supply chain agreeing to restrict competition at each stage of the production process.
Cartels are often formed by businesses that want to protect their market share and profits from new entrants or from existing competitors. They can be difficult to detect, as members often communicate secretly and use code words to avoid being detected by authorities.
In many countries, cartels are illegal and subject to severe penalties. The penalties can include fines, imprisonment, and asset seizure. Governments often use anti-trust laws to break up cartels and promote fair competition in the marketplace.
In conclusion, a cartel is an agreement between businesses or organizations that aims to limit competition and control prices in a particular industry. Cartels are often illegal and are subject to strict anti-trust laws in many countries. They can have significant negative impacts on consumers, the economy, and the marketplace. It is important for businesses to follow fair competition practices to promote healthy competition and a fair marketplace for all.