A cartel is a formal (explicit) agreement among firms. Cartels usually occur in an oligopolistic industry, where there are a small number of sellers and usually involve homogeneous products. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these. The aim of such collusion is to increase individual member's profits by reducing competition. Competition laws forbid cartels. Identifying and breaking up cartels is an important part of the competition policy in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to collude on paper.Khemani, R. S. and D. M. Shapiro (1993): Glossary of Industrial Organisation Economics and Competition Law. Compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for

Source: http://en.wikipedia.org/wiki/Cartel
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