BEGINNER

Cartel

FEBRUARY 22, 2013

An agreement between two or more firms in the same industry to fix prices at a high level or to restrict output in an effort to increase profits by reducing competition. Members of cartels face a strong incentive to break the agreement by lowering prices in order to undercut other members, thereby gaining all the profit. They are also threatened by new entrants into the market who could undercut the prices of the cartel. Consequently, it is rare to find a stable cartel in a free-market system economy.

The Truth About Monopolies and Anti-Trust Laws

 

 

Mark Hendrickson - Monopoly and Anti-Trust

 

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