Answers » Categories » Economics

What are the gains associated with formation of cartel by producers?

1 Answer

A cartel is a formal agreement among competing firms. Manufacturers of a certain product may fix prices, production output or allocate customers in order to increase members' profits by reducing competition. Setting common prices allows monopoly pricing of their products, therefore cartels are favorable for producers and harmful for free competition.

A cartel agreement can be concluded if there is a small number of manufacturers and their products are homogeneous.

Answer this question

by Anonymous - Already have an account? Login now!
Your Name:  

Your Answer:  
Source(s): (optional)

Enter the text you see in the image below
What do you see?
Can't read the image? View a new one.
Your answer will appear after being approved.

Ask your own question