cartels are seemingly independent producer groups whose goal is to increase their collective profits by pricing, limiting supplies, or other restrictive practices. Cartels usually control the selling price, but some are set to control the price of purchased inputs. Antitrust laws seek to prevent or ban cartels. A single entity which holds a monopoly by this definition can not be a cartel, although it may be guilty of misusing the monopoly in other ways. Cartels usually occur in oligopolies, where there is a small number of sellers and usually involves homogeneous products. The tender conspiracy is a special kind of cartel.
Video Cartel
Ikhtisar
People from the same trade rarely meet together, even for fun and diversion, but the conversation ends in a conspiracy against the public, or in some inventions to raise prices.
A survey of hundreds of published economic studies and legal decisions of antitrust authorities found that the average price increase achieved by the cartel in the last 200 years was about 23%. The international private cartel (which with participants from two or more countries) has an average price increase of 28%, while the domestic cartel averages 18%. Less than 10% of all cartels in the sample failed to raise market prices.
In general, cartel agreements are economically unstable because there are incentives for members to cheat by selling below an agreed price or selling more than the production quota set by the cartel (see also game theory). This has caused many cartels that try to set product prices to be unsuccessful in the long run. The empirical study of the cartels of the 20th century has determined that the average duration of cartels found is from 5 to 8 years. However, once the cartel is damaged, the incentive to form the cartel again and the cartel can be reshaped. Publicly known cartels that do not follow this cycle include, by some accounts, the Organization of Petroleum Exporting Countries (OPEC).
Pricing is often done internationally. When an agreement to control prices is sanctioned by a multilateral treaty or protected by national sovereignty, no antitrust action can be taken. Examples of price fixing include oil that costs partly controlled by supply by OPEC countries. Also international airline tickets have prices set by the agreement with IATA, a practice in which there are special exceptions in antitrust laws.
Before World War II (except in the United States), cartel members could sign contracts that could be executed in a court of law. However, current pricing by private entities is illegal under antitrust laws in more than 140 countries. Examples of international cartels charged are lysine, citric acid, graphite electrodes, and bulk vitamins.
Maps Cartel
Example
OPEC: As the name suggests, OPEC is organized by sovereign nations. This can not be done for antitrust enforcement in other jurisdictions based on the doctrine of state immunity under public international law. However, group members often violate ratings by exceeding the agreed production quota.
Many trade associations, especially in industries dominated by only a few large companies, have been accused of being the front for cartels or facilitating secret meetings among cartel members.
Although cartels are usually considered a group of companies, some consider unions as cartels, as they seek to raise the price of labor (wages) by preventing competition. For example, negotiated cartelism is the regulation of labor in which the price of labor is held above the market clearing level through a trade union lever over the employer.
Examples of new international cartels are those made by members of the Asian Race Federation and documented in the Good Neighbor Policy signed on September 1, 2003.
See also
Bibliography
- Bishop, Simon and Mike Walker (1999): The Economic of EC Competition Law . Sweet and Maxwell.
- Connor, John M. (2008): Global Pricing: 2nd Paperback Edition . Heidelberg: Springer.
- Freyer, Tony A.: Anti-monopoly and global capitalism 1930-2004 , New York 2006.
- Hexner, Ervin, The International Steel Cartel , Chapel Hill 1943.
- KleinwÃÆ'¤chter, Friedrich, Die Kartelle. Ein Beitrag zur Frage der Organization der Volkswirtschaft , Innsbruck 1883.
- Levenstein, Margaret C. and Valerie Y. Suslow. "What Determines Cartel's Success?" Journal of Economic Literature 64 (March 2006): 43-95.
- Liefmann, Robert:
- Martyniszyn, Marek, "Export Cartel: What is the Law for Targeting Your Neighbors? Analysis in the Recent Case of Laws", International Law Journal of Economics 15 (1) (2012): 181- 222.
- Stocking, George W. and Myron W. Watkins. Cartel in Action . New York: Twentieth Century Fund (1946).
- Stigler, George J., "The broad and basic monopoly, in: Overview of the American economy , Bd. 32 (1942), pp.Ã, 1-22.
- Stigler, George J., Price theory , New York 1987, 4th Ed.
- Tirole, Jean (1988): Theory of Industrial Organizations . The MIT Press, Cambridge, Massachusetts.
- Wells, Wyatt C.: Antimonopoly and the Formation of the Postwar World , New York 2002.
References
External links
- Costing Overcharges
- BBC.co.uk
Source of the article : Wikipedia
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