Get to know the vital terms of Logistics and Supply Chain Management.
A cartel is basically an independent group of businesses or organizations that collaborate to control the production, pricing, or distribution of a particular good or service rather than competing with each other. In doing so, they try to limit competition and manipulate the market for their collective benefit.
Collusion: Cartel members agree to cooperate with each other instead of engaging in competition against one another. They may fix prices, reduce output, or even divide markets.
Market Control: The market operates in a crony and oligopolistic fashion either by lessening supply or inflating prices, which makes it challenging for their rivals to enter or survive in the market.
Illegal in Many Regions: Cartels are illegal in most regions mainly because of their negatives as regards competition and markets’ well-being based on the equity principle. They tend to lead to high prices and less availability of products for consumers.
Price Fixing: Cartels in logistics fix the shipping or transportation rates, which becomes hard for businesses to obtain a fair cost for the movement of their goods.
Cartels can impose artificial control on the supply of necessities like services or goods, affecting the efficiency of global supply chains.
Cartels are formed when businesses have their interests in mind, which often leads to the opposite or restricted competition and negative effects on pricing and supplies.