USA HISTORY

Detailed explanation-1: -Cartels are competitors in the same industry and seek to reduce that competition by controlling pricing in agreement with one another. Tactics used by cartels include reduction of supply, price-fixing, collusive bidding, and market carving.

Detailed explanation-2: -Cartels attempt to increase members’ profits while maintaining the illusion of competition. There are 4 forms of cartel activity. These are price fixing, sharing markets, rigging bids and controlling output.

Detailed explanation-3: -A cartel is a group of firms acting together to limit output, raise price, and increase profit. Cartels are illegal.

Detailed explanation-4: -What is a Cartel? A Cartel is a group of firms or nations who attempt to control the price or supply of a commodity (such as oil) through mutual restraint on production. These associations of companies seek to control a market in a monopolistic manner.

Detailed explanation-5: -On one hand, the cartel can be viewed as a contractual arrangement wherein firms face the problem of cost of negotiation, bargaining, lack of legal enforcement. On the other, we have merger, which is an option to internalize the transaction cost but it involves organizational costs and agency problems.