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Define Cartel and briefly describe the main aims of cartel

Define Cartel and briefly describe the main aims of cartel

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There are two types of collusion in oligopoly: (i) Cartel (ii) Price leadership. Cartel is a formal organisation of oligopoly firms. It is the perfect form of collision. It is group of firms mutually decide the level of price and quantity in an industry and get rid of uncertainty. In broader sense it is in form of trade association, professional organisation etc. Cartels act as a multi-plat monopolist.
Fixing price for joint maximisation for the profit of industry.
Market sharing between the members.
Cartels can be divided into two: Perfect cartel and market sharing cartel. In perfect cartel, the members will not cheat each other. On single firm decide the prices and quantity. Cartels lose market share in the market sharing cartel.

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