Cartel
A cartel is an agreement between companies within the same industry to restrict competition. This is often achieved by agreeing prices among themselves, limiting production, or dividing markets and customers. Cartels are usually formed in industries where a small number of companies dominate the market. The goal is to increase market stability and maximize members' profitability, thus reducing competition. Cartels have a major impact on the economy and often harm consumers, through higher prices and lower innovation.
Purpose and application of cartels
The main purpose of a cartel is to achieve economic benefits for the participating companies. This includes regulating production to prevent overproduction, and stabilizing prices to ensure profits. Markets are also divided to prevent members from directly competing with each other. Cartels are most common in industries such as oil, steel, and chemicals, where the cost of entering the market is high and products are often standardized. Cartelization is illegal in many countries under antitrust laws because it interferes with free market forces.
