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Understaning Cartel of Microeconomics
5
Cartel Regulation
Raising market price and reducing quantity of good
this graph shows the increase in price and reduce in quantity of companies in cartel.
Companies must meet the illegal and unofficial agreement
- They collude nontransparent, and secretly
- Along with purpose of getting better-off together
Cartels encompass practices
- price fixing .
- customer and/or market share allocations
-bid rigging
-output restrains
Example for Cartel Regulation
" In Latin America, Brazil recently fined medical and industrial gas producers for price fixing, customer allocation and bid rigging, and has also conducted its own investigations and prosecutions of TFT-LCD and air cargo cartels against the backdrop of the broader international actions against those firms."
Source: Pis, F and Peay, L. (2013). Cartel Regulation 2013 - Introduction. Available: http://www.latinlawyer.com/reference/article/44266/introduction/. Last accessed 18 Mar 2013.
Cartel formations are forbidden by law
-No restriction in Europe and US
- To avoid the huge power of monopolies in cartel.
-Cartel can create higher price and higher inflation.
Avoiding competition among companies
- Companies shake hand to agree cooperation
This video is example of
"what cartel is"
- Even they had been the opponent to each other .
Getting the optimal outcomes
It is just the simple video regarding explanation of what cartel is
- Co-operation gives companies in cartel the right in making conversation to getting the best final outcomes.
- Outcomes will give the highest profit for each firm.
Cartel Formation
Maximizing joint profits
Understanding Cartels
Maximizing joint profit by fixing the industry’s output at the level at which MR and MC curves of the cartel intersect each other.
Including a number of companies
- Co-operate to others in setting outcome and price of each producer.
-Trading the same product
-Wishing to keep the stable price
-Cartel can be treated like Oligopoly.
Thanks for your watching
Cartel Functioning
Student Name: Le Hai Anh
Uwe student no: 11041198