Cartel

Loading the player...

What is a 'Cartel'

A cartel is 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.

BREAKING DOWN '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. Organization Of Petroleum Exporting ...

    An organization consisting of the world's major oil-exporting ...
  2. OPEC Basket

    A weighted average of oil prices collected from various oil producing ...
  3. Sherman Antitrust Act

    The Sherman Anti-Trust Act is landmark 1890 U.S. legislation ...
  4. Organization Of Arab Petroleum ...

    An inter-governmental organization based in Kuwait that seeks ...
  5. Cournot Competition

    An economic model that describes an industry structure in which ...
  6. Gas Exporting Countries Forum (GECF)

    An organization of the world's leading gas producers that was ...
Related Articles
  1. Economics

    Organization of Petroleum Exporting Countries

    OPEC is a cartel that aims to manage the oil supply in order to set prices in the world market.
  2. Investing News

    Does Indonesia’s OPEC Membership Matter?

    The sprawling archipelago nation joined OPEC in 1962 and suspended its membership on January 1, 2009, mostly due to declining domestic oil production and rising domestic demand. Indonesia will ...
  3. Stock Analysis

    This Stock/Option Combo Could Land A 45% Return

    Prices for agriculture commodities such as corn, wheat and soy have been climbing sharply over the past several weeks. The chart of PowerShares DB Agriculture (NYSE: DBA) helps illustrate the ...
  4. Investing News

    OPEC Predicts Oil at $70 Per Barrel in 2020

    According to Organization of Petroleum Exporting Countries’ (OPEC) annual World oil Outlook report released today, oil prices will rise to $70 per barrel by 2020 and to $95 per barrel by 2045.
  5. Investing Basics

    How Far Has OPEC Fallen?

    While it is possible that OPEC will once again be a market force, right now OPEC looks like a weak team with one dominant player.
  6. Economics

    OPEC vs the U.S.: Who Controls Oil Prices?

    In the last 100 years, pricing power for oil has swung between the United States and OPEC. What does the future hold?
  7. Investing News

    Oil's Woes Spill Over to Stocks

    After over a 300 point gain on Friday following a strong employment report, the Dow Jones Industrial Average (DJIA) was pulled into negative territory as it lost over 100 points.
  8. Economics

    Meet OPEC, Manager Of Oil Wealth

    This organization's decisions can influence oil prices, but there is a limit to its power.
  9. Investing News

    OPEC Scales Back Oil Production and Demand Forecasts

    The Organization of Petroleum Exporting Countries (OPEC) pared its forecast for global oil demand in its monthly report released on September 14th.
  10. Investing

    How El Chapo Became a Billionaire Druglord

    An overview of how the infamous Mexican drug kingpin Joaquín 'El Chapo' Guzmán became one of the world's most powerful and wealthiest persons.
RELATED FAQS
  1. How much influence does OPEC have on the global price of oil?

    Discover how much influence OPEC has on the price of oil. OPEC looks to support the price of oil by coordinating supply cuts ... Read Answer >>
  2. To what extent is the oil and gas sector dominated by a few major companies?

    Discover how the oil and gas industry has become a highly competitive, diverse and global market, and learn why nationalized ... Read Answer >>
  3. To what extent does government regulation impact the electronics sector?

    Learn more about production regulation in the electronics industry and how these regulations may contribute to lesser productivity ... Read Answer >>
  4. What causes oil prices to fluctuate?

    Discover how OPEC, demand and supply, natural disasters, production costs and political instability are some of the major ... Read Answer >>
  5. How does a monopoly contribute to market failure?

    Read a simple overview of the theory of market monopoly, where it originated and some contemporary challenges to the classical ... Read Answer >>
  6. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, beginning with the Glass-Steagall Act ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center