Cartel
Cartel
Cartel (/kɑːrˈtɛl/; from the French cartel, a letter of defiance) is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where the number of sellers is small and the products being traded are usually homogeneous.
Etymology
The term "cartel" comes from the Italian word cartello, which means a leaf of paper or placard. In the mid 19th century, it was extended to mean a written agreement between warring parties during a truce. It later evolved to refer to a written agreement between businesses to control production, marketing, and distribution of goods.
Related Terms
- Oligopoly: A market structure in which a small number of firms has the large majority of market share.
- Monopoly: A situation in which a single company or group owns all or nearly all of the market for a given type of product or service.
- Collusion: A non-competitive secret or illegal agreement between rivals that attempts to disrupt the market's equilibrium.
- Price fixing: An agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price.
- Market share: The percentage of a market accounted for by a specific entity.
External links
- Medical encyclopedia article on Cartel
- Wikipedia's article - Cartel
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