A Cartel is a formal, explicit agreement among
competing firms. It is a formal organization of producers and manufacturers
that agree to fix prices, marketing, and production.
Cartels usually occur in an Oligopolistic
industry, where the number of sellers is small
(usually because barriers to entry, most notably startup costs, are high) and
the products being traded are usually commodities.
Cartel members may agree on such matters as price fixing , total industry output, market shares ,allocation of customers, allocation of territories, bid rigging ,establishment of common sales agencies, and the
division of profits or combination of these. The aim of such collusion (also called the cartel
agreement) is to increase individual members' profits by reducing competition.
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