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cartel

cartel (kärtĕl´), national or international organization of manufacturers or traders allied by agreement to fix prices, limit supply, divide markets, or to fix quotas for sales, manufacture, or division of profits among the member firms. In that it often has international scope the cartel is broader than the trust, and in that it carries on manufacture it differs from the speculative corner or ring. The existence of cartels is in opposition to classic theories of economic competition and the free market, and they are forbidden by law in many nations. In Germany, however, by the outset of World War II, nearly all industry was controlled by cartels closely supervised by the government. Opponents of cartels have alleged that they have driven competing firms out of existence, reduced volume of trade, raised prices to consumers, and protected inefficient members from competition. Cartels were blamed for having benefited German aggression by furnishing markets, profits, and technical data to Germany before World War II. Supporters of cartels claim that they protect the weaker participating firms, do away to an extent with limitations on trade resulting from high tariffs, distribute risks and profits equitably, stabilize markets, reduce costs, and hence protect consumers. The U.S. government legalized export associations in 1918 and has itself participated in agreements regulating production and international trade in foodstuffs, rubber, and other commodities. Because they imply the agreement and supervision of several governments, cartels in international trade are usually felt to be less harmful than those that tend to create monopolies in the home market for participants. Formal international agreements, involving governments as well as private firms, still control price, output, and distribution in some industries, notably in diamonds and in oil. Although not referred to as cartels, these agreements have the same general effect on world trade. The Organization of Petroleum Exporting Countries (OPEC) provides an outstanding example of the complex synergy of economics, politics, and international affairs that is involved in the dealings of large cartels. The term cartel is also used to describe the large criminal gangs in the illegal drug trade, especially those in Latin America, that dominate in certain regions or control certain aspects of the trade. See also tariff.

See E. Kefauver, In a Few Hands (1965); H. Kronstein, The Law of International Cartels (1973); J. Hobson, Cartels, Trusts, and the Economic Power of Bankers, Financiers, and Money-Moguls (1985).

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Cartel

CARTEL


A cartel is a group of independently owned businesses that attempts to regulate pricing, production, and distribution within an industry. To accomplish this, cartel members agree to act together rather than compete against each other. As a result the cartel does not allow market forces to determine prices; instead the cartel decides how much to charge, how much to produce, and how to divide the market. The term cartel is usually applied to agreements that regulate business in the international marketplace. (Collaborative arrangements on a national level are called trusts.)

Cartels originated in Germany and date back to the 1870s. In the early years of the twentieth century the German government encouraged companies to join cartels as a way to increase Germany's export trade. During that same period the aluminum industry was entirely controlled by a cartel made up of four companies from the United States, France, Germany, and Great Britain.

After World War I (19141918) cartels flourished, and by the start of World War II (19391945) there were an estimated 200 international cartels. These cartels controlled 30 percent of worldwide trade in industries such as rubber, steel, chemicals, and tin. More recently, oil-exporting nations formed cartels in the 1970s to establish market prices for crude oil. These oil cartels, operating under the auspices of the Organization of Petroleum Exporting Countries (OPEC), initially enjoyed success in controlling the world's oil supply and prices. However as oil prices went up demand for oil decreased; by the 1980s OPEC's influence eroded. While antitrust laws make collusive agreements illegal in the United States, national cartels are common in Japan, where businesses operate under a system of managed competition.

See also: OPEC Oil Embargo

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Cartel

CARTEL

A combination of producers of any product joined together to control its production, sale, and price, so as to obtain amonopolyand restrict competition in any particular industry or commodity. Cartels exist primarily in Europe, being illegal in the United States underantitrust laws. Also, an association by agreement of companies or sections of companies having common interests, designed to prevent extreme orunfair competitionand allocate markets, and to promote the interchange of knowledge resulting from scientific and technical research, exchange of patent rights, and standardization of products.

In war, an agreement between two hostile powers for the delivery of prisoners or deserters, or authorizing certain nonhostile intercourse between each other that would otherwise be prevented by the state of war, for example, agreements between enemies for intercommunication by post, telegraph, telephone, or railway.

Although illegal in the United States, foreign cartels influence prices within the United States on imported and smuggled goods that they control. The United States has sued the De Beers diamond cartel several times, and works to stop the flow of illegal narcotics, whose production and distribution are largely controlled by drug cartels.

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cartel

car·tel / kärˈtel/ • n. an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition: the Colombian drug cartels. ∎  chiefly hist. a coalition or cooperative arrangement between political parties intended to promote a mutual interest.

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cartel

cartel written challenge XVI; written agreement as to exchange of prisoners XVII; (after G. kartell), combination for business or political purposes XX. — F. — It. cartello placard, challenge, dim. of carta paper, letter (cf. CHART); see -EL 2.

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cartel

cartel Formal agreement among the producers of a particular product to fix the price and divide the market among themselves. It usually results in higher prices for consumers and extra profits for the producers. Cartels are illegal in many countries.

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Cartel

Cartel

political or economic combination between parties or business organizations; hence, the parties themselves. See also combine, syndicate.

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cartel

cartel See MONOPOLY.

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cartel

cartelAdele, Aix-la-Chapelle, aquarelle, artel, au naturel, bagatelle, béchamel, befell, bell, belle, boatel, Brunel, Cadell, carousel, cartel, cell, Chanel, chanterelle, clientele, Clonmel, compel, Cornell, crime passionnel, dell, demoiselle, dispel, dwell, el, ell, Estelle, excel, expel, farewell, fell, Fidel, fontanelle, foretell, Gabrielle, gazelle, gel, Giselle, hell, hotel, impel, knell, lapel, mademoiselle, maître d'hôtel, Manuel, marcel, matériel, mesdemoiselles, Michel, Michelle, Miguel, misspell, morel, moschatel, Moselle, motel, muscatel, nacelle, Nell, Nobel, Noel, organelle, outsell, Parnell, pell-mell, personnel, propel, quell, quenelle, rappel, Raquel, Ravel, rebel, repel, Rochelle, Sahel, sardelle, sell, shell, show-and-tell, smell, Snell, spell, spinel, swell, tell, undersell, vielle, villanelle, well, yell •Buñuel • Pachelbel • handbell •barbell • harebell • decibel • doorbell •cowbell • bluebell • Annabel •mirabelle • Christabel • Jezebel •Isabel, Isobel •nutshell • infidel • asphodel •zinfandel • Grenfell • Hillel • parallel •Cozumel • caramel • Fresnel •pimpernel • pipistrelle • Tricel •filoselle

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