A cartel is a formal collusion agreement among firms to coordinate their actions on pricing, output levels, and other strategic decisions in order to maximize joint profits. It is often illegal and violates antitrust laws in many countries, including the United States. Cartels are more likely to form in oligopolistic markets where a small number of large firms dominate the industry.

Solved

A Cartel Is

Question 28

Multiple Choice

A cartel is

A) a formal collusive arrangement among firms.
B) found most of the time in monopolistic competition.
C) usually exempt from antitrust laws in the United States.
D) easier to maintain as the number of firms involved increases.
E) unlikely to occur in international markets.

Correct Answer: