Cartels are not always successful because:
A) their members have profit incentives to cheat on the agreement.
B) nowhere in the world are cartel agreements considered legal.
C) cartels face a lot of competition from monopolies.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

Cartels are not always successful because their members have profit incentives to cheat on the agreement. Despite the potential gains from operating as a price-fixing cartel, individual firms may be tempted to cheat by producing more of the good or service than they agreed to, or to sell at a lower price, in order to increase their own profits. When cartel members cheat in this way, it can undermine the entire agreement and lead to a collapse of the cartel.

Cartels Are Not Always Successful Because