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ECONOMICS 2 TITLE: CARTELS WORDS: 1300 Cartels are usually happen in an oligopoly market, where a few large firms dominate the market. A cartel is when two or more of these firms make a formal agreement to collude, to try and limit competition between them. This can be done in a few ways. Members may have fixed prices that they sell their goods, this may be low to increase sales and stop new entrants or high as the will dominate the market. Cartel members also agree on such factors as market share and advertising expenditure. Quotas are another way firms collude, the member firms will set quotas on the amount a firm will produce (production quota) and sell (sales quota). But how do the firms agree on each members quota? The normal method would be to divide the market between the members according to their current market share. So basically the firms...

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