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What is a cartel?

Posted on April 16, 2014 at 8:25 PM

The subject of cartel formation arises when talking about an oligopolistic (a few powerful firms) market structure. If these firms collude and coordinate all business decisions, then a cartel is formed. The cartel acts like a monopoly as it controls the price and output in the industry. It's highly inefficient, the consumers lose, and the cartel's profits rise. OPEC is a cartel.

AP Microeconomics Unit 2 Product Markets

Categories: AP Microeconomics, Micro Unit 2 Product Markets

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