Conditions Necessary for a Cartel to Exist

Conditions Necessary for a Cartel to Exist - each cartel...

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Conditions Necessary for a Cartel to Exist A cartel is ‘inherently more fragile than a monopolist’ b/c of the incentive to cheat 6 conditions required for a cartel to exist for a prolonged period of time (Hovenkamp) o (1) high barriers to entry o (2) the cartel members must produce a sufficiently large share of the product that their decisions are not undermined by producers who are not cartel members o (3) cartel members must be able to reach a consensus on the amount of output that
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Unformatted text preview: each cartel member will produce o (4) the cartel must be able to detect cheating o (5) the cartel must be able to effectively punish cheating when detected o (6) the cartel must be undetectable from the outside Overall, the keys to a successful cartel are (1) high entry barriers, (2) high market concentration, and (3) low elasticity of demand www.swapnotes.com...
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This note was uploaded on 02/14/2008 for the course LAW 7557 taught by Professor Crane during the Fall '07 term at Yeshiva.

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