Cartel

AAA

DEFINITION of 'Cartel'

An organization created from a formal agreement between a group of producers of a good or service, to regulate supply in an effort to regulate or manipulate prices. A cartel is a collection of businesses or countries that act together as a single producer and agree to influence prices for certain goods and services by controlling production and marketing. A cartel has less command over an industry than a monopoly - a situation where a single group or company owns all or nearly all of a given product or service's market. In the United States, cartels are illegal; however, the Organization of Petroleum Exporting Countries (OPEC) - the world's largest cartel - is protected by U.S. foreign trade laws.

INVESTOPEDIA EXPLAINS 'Cartel'

Amid controversy in the mid-2000s, the U.S. Congress attempted to penalize OPEC as an illegal cartel but the effort was blocked over concerns of retaliation and potential negative effects on U.S. businesses. Despite the fact that OPEC is considered by many to be a cartel, members of OPEC have maintained it is not a cartel at all, but an international organization with a legal, permanent and necessary mission.

RELATED TERMS
  1. International Labor Organization ...

    A United Nations agency that strives to serve as a uniting force ...
  2. Organization Of Petroleum Exporting ...

    An organization consisting of the world's major oil-exporting ...
  3. Collusion

    A non-competitive agreement between rivals that attempts to disrupt ...
  4. Price Fixing

    Establishing the price of a product or service, rather than allowing ...
  5. Price Rigging

    An illegal action performed by a group of conspiring businesses ...
  6. Supply

    A fundamental economic concept that describes the total amount ...
RELATED FAQS
  1. What are the different types of price discrimination and how are they used?

    Price discrimination is one of the competitive practices used by larger, established businesses in an attempt to profit from ... Read Full Answer >>
  2. What are the different sources of business risk?

    A certain risk level is inherent in running a business. A company cannot completely eliminate risk, but it can control or ... Read Full Answer >>
  3. What is the difference between a bill of exchange and a promissory note?

    A bill of exchange is a written agreement between two parties – the buyer and the seller – used primarily in international ... Read Full Answer >>
  4. How does the law of diminishing returns affect marginal revenue?

    The law of diminishing returns is better thought of as the law of increasing opportunity costs. The law states that -- if ... Read Full Answer >>
  5. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
  6. How do command economies control surplus production and unemployment rates?

    Historically, command economies don't have the luxury of surplus production; chronic shortages are the norm. They have also ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Getting A Grip On The Cost Of Gas

    Feeling overwhelmed by rising oil prices? We offer some tips that will save you money.
  2. Fundamental Analysis

    Hamburger Economics: The Big Mac Index

    In theory, PPP stands up much better than it does in reality. Find out how to evaluate currencies according to the price of a Big Mac.
  3. Personal Finance

    Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.
  4. Insurance

    Understanding Japanese Keiretsu

    The structure of major companies in Japan is steeped in tradition and relationships.
  5. Active Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  6. Economics

    Meet OPEC, Manager Of Oil Wealth

    This organization's decisions can influence oil prices, but there is a limit to its power.
  7. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  8. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.
  9. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  10. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center