Question

What are cartels? Give an example.

Answer 1

A cartel is a formal 'collusive agreement' among the firms under oligopoly. Firms collude to avoid competition. They fix their output and price as decided by the cartel. Collectively, the firms try to earn monopoly profits.

Example: OPEC is a cartel that was set up in 1960 by the world's five major oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.