Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

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This is because each member country of a natural resource cartel may have their own motives for maximizing their own profits, which can lead to cheating on quotas and destabilize the entire cartel. Additionally, excess capacity allows for an easier ability to cheat on quotas and creates a lack of pricing power, which can also contribute to instability.

Natural Resource Cartels Such as OPEC Are Inherently Unstable Because