What is the impact of cartels?
A cartel is an agreement between companies in the same industry to fix prices, limit production, and divide up markets.
By working together, cartels can eliminate competition and raise prices.
This can have a major impact on the economy, as it can lead to higher prices for consumers and less choice.What do cartels do to the economy?
It's illegal for businesses to agree to act together in a cartel instead of competing.
Cartels cheat consumers and other businesses.
They restrict healthy economic growth, drive up prices and reduce innovation and investment.
Cartels attempt to increase members' profits while maintaining the illusion of competition.What are the disadvantages of a cartel?
Disadvantages of Cartels
Cartels lead to price manipulation, ineffective production methods, and a lack of competition, all of which eventually result in an inefficient market.- The common explanation for the instability of cartels is that a successful cartel agreement creates strong incentives for individual members to cheat.
Cheating invites retaliation and the result is that the cartel often fails.
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