STUDY THE OUTCOMES OF CHEATING IN

COLLUSION IN OLIGOPOLY

A project submitted in partial fulfilment of the course

MANAGERIAL ECONOMICS, 3rd SEMESTER during the
academic year 2018-2019

SUBMITTED BY:
SATYAM SINGH

ROLL NO.- 1852

B.B.A. LL.B.
SUBMITTED TO:
Dr. Manoj Mishra
FACULTY OF MANAGERIAL ECONOMICS

SEPTEMBER, 2018
CHANAKYA NATIONAL LAW UNIVERSITY, NAYAYA
NAGAR, MEETHAPUR, PATNA-800001
 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the BB.A. LL.B (Hons.) Project Report entitled
“STUDY THE OUTCOMES OF CHEATING IN COLLUSION IN OLIGOPOLY”
submitted at Chanakya National Law University, Patna is an authentic record of my
work carried out under the supervision of Dr. Manoj Mishra. I have not submitted this
work elsewhere for any other degree or diploma. I am fully responsible for the contents
of my Project Report.

(Signature of the Candidate)

Satyam Singh

Chanakya National Law University, Patna

i
 ACKNOWLEDGEMENT

A project is a joint endeavour which is to be accomplished with utmost compassion, diligence

and with support of all. Gratitude is a noble response of one’s soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my
heart to all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered
Managerial Economics teacher Dr. Manoj Mishra whose support and guidance was the
driving force to successfully complete this project. I express my heartfelt gratitude to him.
Thanks are also due to my parents, family, siblings, my dear friends and all those who helped
me in this project in any way. Last but not the least; I would like to express my sincere
gratitude to our Managerial Economics teacher for providing us with such a golden
opportunity to showcase our talents. Also this project was instrumental in making me know
more about the persons competent to transfer. This project played an important role in
making me understand more about the people who are competent to transfer and who are not.
It was truly an endeavour which enabled me to embark on a journey which redefined my
intelligentsia, induced my mind to discover the intricacies involved in the competency of the
people in the Managerial Economics.

Moreover, thanks to all those who helped me in any way be it words, presence,
Encouragement or blessings...

- Satyam Singh
- 3rd Semester
- B.BA LL.B
 TABLE OF CONTENTS

Declaration................................................................................................................................i

Acknowledgement…...............................................................................................................ii

Table of Contents…................................................................................................................iii

Aims and Objectives…............................................................................................................iv

Research Methodology…........................................................................................................iv

Review of Literature................................................................................................................iv

Hypothesis.................................................................................................................................v

1. Introduction…..........................................................................................................................1

2. Features of Oligopoly............................................................................................................2-4

3. Advantages and Disadvantages of Oligopoly........................................................................5-6

4. Equilibrium in Oligopoly.....................................................................................................7-10

5. Case of The De Beer’s Diamond Cartel............................................................................11-12

6. Problems of Cartels….......................................................................................................13-14

7. Features determine the degree of success of o Collusive agreement.......................................15

8. Analysis and Findings….........................................................................................................16

9. Conclusion and Suggestion.....................................................................................................17

Bibliography...........................................................................................................................18

ii
 AIMS AND OBJECTIVES

With this project the researcher intends to:

1. To know about the oligopoly.

2. To know the outcomes in collusion in oligopoly.

RESEARCH METHODOLOGY

The researches would be following the doctrinal research methodology. The researcher will
be collecting valuable data from library which includes the previously written works.

All the website, books, journals etc.

REVIEW OF LITERATURE
The researcher intends to examine the secondary sources in thus project. The secondary
sources include books, websites, photographs, articles, e-articles and reports in appropriate
form, essential for this study.

HYPOTHESIS

In this project the researcher has attempted to make a detailed study about the outcomes of
cheating in an oligopoly. The researcher has also studied the consequences of cheating in the
market and on the firm.
 INTRODUCTION

An oligopoly is a market form in which a market or an industry is dominated by small

number of sellers, called oligopolists. The word "Oligopoly" comes from two Greek
words: oligo, meaning "few" and polein, meaning "sellers". Unlike monopoly, which has
no competitor and perfectly & monopolistically competitive firm, which has many
competitors, an oligopoly firm faces only few competitors. An oligopoly has greater market
power than monopolistic competition and perfect competition, but not as much market power
as monopoly. Since there are few participants in this type of market, each oligopolist is aware
of actions of the others. Because of the thorough competition, it is often called as ‘cut-throat’
competition. Many industries in the developed economies are of oligopolistic form of market.
This form of market is an emerging phenomenon not only in domestic but in international
market as well.

Few examples of typical oligopoly markets are: (a) Credit Card (Visa, Master Card,
American Express & Discover are competing in the global market), (b) Soft Drink (Pepsi &
Coca Cola are competing in Indian Market), (c) Automobile industry [specially family car
manufacturing] (Maruti-Suzuki, Tata, Hyundai, Honda, Toyota, General Motors & Ford are
competing in the Indian market)

When there are few firms in the market, they may collude to set a price or output level
for the market in order to maximize industry profits. As a result, price will be higher
than the market-clearing price, and output is likely to be lower. At the extreme, the
colluding firms may act as a monopoly, reducing their individual output so that their
collective output would equal that of a monopolist, allowing them to earn higher
profits.

1| Page
 FEATURES OF OLIGOPOLY

1. Few Sellers: Under the Oligopoly market, the sellers are few, and the customers are
many. Few firms dominating the market enjoys a considerable control over the price
of the product.1 The exact number of firms is not defined. Each firm produces a
significant portion of the total output. There exists severe competition among different
firms and each firm try to manipulate both prices and volume of production to
outsmart each other. For example, the market for automobiles in India is an
oligopolist structure as there are only few producers of automobiles.

2. Interdependence: As the number of firms is small, each (sizeable) firm has to

consider the actions and the possible reaction of rivals, while taking business
decisions as to its price, output or promotion. This will enable the firm to know how
the buyers of its product will react to any such change.On one hand, every firm is in a
position to influence the price, output and profits of other firms in the market. On the
other hand, it cannot fail to take into account the reactions of other firms to its price
and output policy. Therefore, there is a good deal of interdependence of the firms
under oligopoly.

Successful decision making depends on the prediction of the reactions of the rival
firms to the policy decisions of the firm. Further, each firm wants to keep its own
decision to be as unpredictable as possible to rivals. Since more than one reaction-
pattern is possible from other firms, we must make assumption about the reaction of

1
http://businessjargons.com/oligopoly-market.html
 others before providing certain and determinate solution of price-output fixation under
oligopoly. Thus, oligopolistic market situation is characterised by mutual
interdependence in policy making, where interdependence is recognised by all the
firms. Suppose, a firm starts a massive advertising campaign or designs a new model
of his product, which captures the market.

This policy change on the part of the firm will have obvious and immediate effect on
its competitors. The competitors are likely to react with counter policies to avoid
drifting off of its customers to other firms. Now, the former firm may have to react.

This process of action-reaction of the firms may continue in an unending phase of

uncertainty. Since, behaviour of at least some of the competitors depend on firm’s
own behaviour, this must be taken care of, when decisions are made by the firm.

Further, to play the game of moves and countermoves, the oligopolists have to be
equipped with both the aggressive and defensive marketing weapons. For example, a
few years back, the Times of India offered the newspaper at an invitation price of Rs.
1.50 on week days. The other national dailies were forced to make downward
revisions in their price policy. Furthermore, later the Hindustan Times started offering
the newspaper at Rs. 1 on weekdays as a mark of celebration of its 75 years of service.

Other newspapers responded by matching the price reduction. Similarly, serving of

Coke as the ‘official drink’ in the Cricket World Cup provoked its competitor Pepsi to
come up with the advertisement ‘nothing official about it.2

3. Advertising: Under oligopoly a major policy change on the part of a firm is likely
to have immediate effects on other firms in the industry. Therefore, the rival firms
remain all the time vigilant about the moves of the firm which takes initiative and
makes policy changes. Thus, advertising is a powerful instrument in the hands of an
oligopolist. A firm under oligopoly can start an aggressive advertising campaign with
the intention of capturing a large part of the market. Other firms in the industry will
obviously resist its defensive advertising.Under perfect competition advertising is
unnecessary while a monopolist may find some advertising to be profitable when his
product is new or when there exist a large number of potential consumers who have

2
http://www.shareyouressays.com/116522/6-main-features-of-oligopolistic-market
 never tried his product earlier. But according to Prof. Baumol, “under oligopoly,
advertising can become a life-and-death matter where a firm which fails to keep up
with the advertising budget of its competitors may find its customers drifting off to
rival products.”

4. Competition: This leads to another feature of the oligopolistic market, the presence
of competition. Since under oligopoly, there are a few sellers, a move by one seller
immediately affects the rivals. So each seller is always on the alert and keeps a close
watch over the moves of its rivals in order to have a counter-move. This is true
competition, “True competition consists of the life of constant struggle, rival against
rival, whom one can only find under oligopoly.”3

5. Entry and Exit Barriers: The demand conditions in the market may be such that
only a few big firms can operate successfully. The firms can easily exit the industry
whenever it wants, but has to face certain barriers to entering into it. These barriers
could be Government license, Patent, large firm’s economies of scale, high capital
requirement, complex technology, etc. Firms can earn profits in the long-run due to
these barriers to entry. Also, sometimes the government regulations favor the existing
large firms, thereby acting as a barrier for the new entrants.4
6. Lack of Uniformity: There is a lack of uniformity among the firms in terms of
their size, some are big, and some are small. Since there are less number of firms, any
action taken by one firm has a considerable effect on the other. Thus, every firm must
keep a close eye on its counterpart and plan the promotional activities accordingly.

3
http://www.economicsdiscussion.net/oligopoly/top-9-characteristics-of-oligopoly-market/7342
4
Firms differ considerably in size. Some may be small, others very large. Such a situation is
asymmetrical. This is very common in the American economy. A symmetrical situation with firms of a
uniform size is rare.
 ADVANTAGES AND DISADVANTAGES OF AN OLIGOPOLY

The Advantages of an Oligopoly

i. High Profits: Since there is such little competition, the companies that are
involved in the market have the potential to bring a large amount of profits.
The services and goods that are controlled through oligopolies are generally
highly needed or wanted by the large majority of the population.

ii. Simple Choices: Having only a few companies that offer the goods or
service that you are looking for makes it easy to compare between them and
choose the best option for you. In other markets it can be difficult to
thoroughly look at all of the competitors to compare pricing and services
offered.

iii. Competitive Prices: Being able to easily compare prices forces these
companies to keep their prices in competition with the other companies
involved in the market. This is a great benefit for the consumers because
prices continually go lower as other companies lower there prices.

Iv. Better Information and Goods: Right along with price competition,
product competition plays a huge part in a the oligopoly market structure. Each
company scrambles to come out with latest and greatest thing in order to sway
consumers to go with their company over a different one. This also goes with
the advertising and amount of information and support that they provide their
customers.5

The Disadvantages of Oligopoly

i. Difficult To Forge A Spot: For small business and other people with creative
ideas in a oligopoly market, the outlook for their business is grim. Extremely large

5
https://thenextgalaxy.com/the-advantages-and-disadvantages-of-ogligopoly/
 and advanced companies completely control the market, making it nearly impossible
for small or new businesses to break into the market place.

ii. Less Choices: In many cases having to choose a company in an oligopoly is like
choosing the lesser evil. The consumers have very limited choices and options for the
services that they want. This is one of the biggest pitfalls of a oligopoly.

iii. Fixed Prices Are Bad For Consumers : While competitive prices come into
play, they are rarely very far apart from any other company that they could go with.
This is because the businesses and corporations that are part of the market agree to fix
prices. Meaning there is a set limit for just how low prices can go, forcing consumers
to pay high prices no matter what.

iv. No Fear Of Competition: Often times the companies that are in the oligopoly
market become very settled with their business. The profits and the way they run
are guaranteed to work, so they no longer feel the need to come up with creative or
innovate new ideas.6

6
https://connectusfund.org/oligopoly-advantages-and-disadvantages
 EQUILIBRIUM IN OLIGOPOLY

With interdependence and the ensuing strategic behaviour as oligopoly’s main characteristics,
it is possible to arrive at the equilibrium for an oligopoly by making differing assumptions
about the behaviour of arrivals. Therefore, there are many models offering equilibrium
solutions to oligopolistic markets:-

1. Cournot Model: This equilibrium was identified by an economist named

Augustin Cournot in 1838. The Cournot model of oligopoly assumes that rival
firms produce a homogenous product, and each attempts to maximize profits
by choosing how much to produce. All firms choose output (quantity)
simultaneously. The basic Cournot assumption is that each firm chooses its
quantity, taking as given the quantity of its rivals. The resulting equilibrium is
a Nash equilibrium in quantities, called a Cournot (Nash) equilibrium. 7If all
firms in an oligopolistic market are at their best response levels of output, the
market is in equilibrium, and no firms would want to deviate from this.A
Cournot player is a passive player taking the rival’s output as given while
working out one’s best.

 There are two firms in the industry- a subset of oligopoly called duopoly.

 The firms produce homogenous products.

 The firms have identical cost functions, with a constant marginal cost. To make it
simpler still, this constant marginal cost is equal to zero.

 There are no new entrants.

2. Bertrand Model: Bertrand competition is a model of competition used in

8
economics, named after Joseph Louis François Bertrand (1822–1900).
Bertrand, wherein he assumes the two firms to be competing with each other
on price. The product is assumed to be identical and each has a marginal cost

7
https://stats.oecd.org/glossary/detail.asp?ID=3183
8
https://en.wikipedia.org/wiki/Bertrand_competition
 equal to constant, C. It is defined as that level at which the industry price
settles after a series of successive price cutting. This price would be equal to
the MC. The price was that we see today in markets, such as airlines.

3. Stackelberg Model: A later development was the Stackelberg model

(1934), which arrives at equilibrium under a specific assumption that there is
one aggressive player and one passive Cournot-kind of player. The aggressive
player, let us assume to be firm A, is called the Stackelberg leader. The
passive player, firm B, is called the Stackelberg follower. This model clearly
points to the emergence of a dominant player with a much larger market share
than the others. This equilibrium will last until none of the firms change their
stance.9

4. Kinked Demand Model: The original idea of the kinked demand model
(Robinson 1936, Sweezy 1939) is based on the assumption that firms
competing in a common market would react to changes in rivals’ prices in an
asymmetric manner. Specifically, when a firm rises its price it expects the
other firms to rise their price comparatively less (under-reaction); when a firm
lowers its price, conversely, it expects the others to reduce even more their
price (over-reaction). This expected behaviour generates a perceived demand
with a "kink" at the original price levels.10

5. CARTEL: Economic profits are the lowest in a perfectly competitive

market structure and increase with the decrease in competition. The profits
increase in oligopoly and reach the maximum in a monopoly. It is the dream
of every seller to operate in a monopoly market. Players in oligopolistic
markets often attempt to get together and collectively behave like a monopoly.
This ensures that the industry earns monopoly profits; this is accomplished by
restricting each firm’s output and raising the price. When sellers in a market
get together and artificially raise the price, they are said to act like cartels. If a
firm cuts its price even a little bit, it can sell all that it wants. This incentive to

9
Managerial Economics by Suma Damodaran
10
http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_09_05.pdf
 cheat on the agreement is called Chiselling. A firm that cheat has nothing to
lose and everything to gain and hence, the fragility of cartels. For a cartel to
succeed, there needs to be an enforcement mechanism to prevent and detect
cheating, and effective barriers to entry. In US, federal government limited air
fare increases, prevented attempts to lower air fares and also restricted the
number of operators on several routes. The most successful and long lasting
cartel in the world has been OPEC (Organization of the Petroleum
Exporting Countries)11

6. COLLUSION: An agreement among firms in a market about quantities to

produce or prices to charge.12Collusive agreements are often resorted to in
oligopolistic markets. The agreement works if the number of firms is few with
minimal product differentiation and minimal cost differences. Wide variation
in demand encourage cheating. Firms operate in a cooperative mode when
they try to minimize competition between themselves. When firms in n
oligopoly actively cooperate with each other, they engage in collusion. This
term denotes a situation in which two or more firms jointly set their prices or
outputs, divide the market among them, or make other business
decisions jointly.13

7. Price leadership: Price leadership is when a firm that is the leader in its
sector determines the price of goods or services. This approach can leave the
leader's rivals with little choice but to follow its lead and match these prices if
they are to hold onto their market share. Alternatively, competitors may also
choose to lower their prices in the hope of gaining market share as discounters.
The impacts of price leadership are more apparent in goods or services that
offer little differentiation from one producer to another and also have
consumer demand levels that make the particular price selected by the market
leader viable based on the potential to attract consumers away from competing

11
http://www.opec.org/opec_web/en/
12
https://ib-con.wikispaces.com/file/view/ Characteristics%20of%20Oligopoly.pdf
13
https://business-finance.blurtit.com/93570/explain-the-concept-of-collusive-oligopoly
 products.14 The firm with the largest market share becomes the leader. Such a
leadership is called dominant price leadership.

For example: OPEC, with Saudi Arabia as the leader, Intel in the chip market
etc.

14
http://www.investopedia.com/terms/p/price-leadership.asp
 CASE OF “The De Beer’s Diamond Cartel”

Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in
the jungles of Brazil, and the entire world production of gem diamonds amounted to a few
pounds a year. In 1870, however, huge diamond mines were discovered near the Orange
River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly,
the market was deluged with diamonds. The British financiers who had organized the South
African mines quickly realized that their investment was endangered; their price depended
almost entirely on their scarcity. If new diamond mines were found in South Africa, the price
of diamonds would drop. Thus, the major investors in the diamond mines realized that they
had no alternative but to merge their interests into a single entity that would be powerful
enough to control production and perpetuate the illusion of scarcity of diamonds. The
instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated
in South Africa. As De Beers took control of all aspects of the world diamond trade, it
assumed many forms.

• In London, it operated under the name “The Diamond Trading Company”.

•In Israel, it was known as "The Syndicate."

•In Europe, it was called the "C.S.O." -- initials referring to the Central Selling Organization,
which was an arm of the Diamond Trading Company.

• In Africa, it disguised its South African origins under subsidiaries with names like Diamond
Development Corporation and Mining Services, Inc.

For most of this century -- it not only either directly owned or controlled all the diamond
mines in southern Africa but also owned diamond trading companies in England, Portugal,
Israel, Belgium, Holland, and Switzerland.

Anticompetitive Tactics

• If prices falling, De Beers reduces supply

• If new suppliers emerge, De Beers will flood market & sell below market prices

• De Beers sells only 10 times a year at “sights” – 125 –150 “sightholders” invited to
purchase diamonds Anticompetitive Tactics (continued)

• Sightholders essentially powerless – can only accept or reject boxes (no negotiation) –
not allowed to resell to retailers (who will lower prices) – De Beers has right to audit
them.15

15
https://are.berkeley.edu/~sberto/DeBeers2008.pdf
 PROBLRMS OF CARTELS

If there are substantial competitors who are not members of the cartel, it cannot
function successfully for long. Such outsiders may sell for a lower price than the cartel
members. This situation puts pressure on the cartel members to reduce their price. If an
outsider competes more directly with some cartel members than others, the outsider will
create pressure on those members to reduce their prices. This fact may create internal conflict
within the cartel. Therefore, there are strong reasons why the cartel wants all significant
competitors to join the cartel. Attempts to include all firms may create evidence of the cartel.
First, there may be documents within the cartel firms complaining about the outsider’s failure
to participate in the cartel. Second, there may be letters or other documents directed to the
outsider that refer to or explain the cartel. Third, an outsider who was approached about
joining a cartel can report what he or she was told about the cartel in the attempt to get him or
her to join.
It is often fruitful to invest in efforts especially to find outsider firms that were
approached but did not join the cartel. Because they remain outsiders, they often are
willing to provide truthful information. It also is useful to talk to firms who were
approached and did join, because they usually were given complete information in
order to be convinced to join. As an investigative tool, it is useful to have the authority to
promise such people or firms that they will not be punished if they tell the truth about what
happened.
During the duration of the vitamin cartels, vitamin prices were increased from 60
percent to 100 percent. In terms of direct overcharges on buyers, the total amount
worldwide was about US$7bn. Buyers in North America, the European Union (EU),
and Asia incurred roughly 90 percent of the global cartel overcharges. The sales of
these global cartels occurred in virtually every country in the world, but were
concentrated in North America (20 percent), the European Economic Area (29
percent), and Asia (55 percent). For all of the cartels together the overcharges
amounted to more than 40 percent of affected world commerce.
Outcome
Almost all of the private vitamins cases were settled. The only vitamins case that went to trial
was the chlorine chloride conspiracy, where the jury decided that the cartel had overcharged
purchasers as the defendants had conspired to fix the price of chlorine chloride. In 1999, six
of the main vitamins companies agreed to a settlement in the private class-action litigation
brought in federal court on behalf of direct purchasers of vitamins and vitamin premix. Later
in 2000, the Justice Department announced guilty plea agreements from two Swiss nationals
and two German nationals, of whom three were high officers in BASF’s Fine Chemicals
Division and one was in a similar position at Roche.
In the same year, two more German pharmaceutical manufacturers (Merck and
Degussa-Huels Ag) were added to the list, along with two US firms (Nepera, Inc., and Reilly
Industries). These guilty pleas involved the vitamin C and vitamin B3. Fourteen chemical
companies were convicted by the US for price-fixing in the vitamins market.
US fines for these fourteen companies and fifteen of the officers were US$915mn.
Two firms received amnesties from the DOJ under the leniency program. Additionally,
sixteen senior executives of the vitamins manufacturers were criminally indicted, of which
fifteen received personal sentences.
 FEATURES DETERMINE THE DEGREE OF SUCCESS OF A
COLLUSIVE AGREEMENT:

Number of firms in the industry: The larger the number, the more difficult the detection. This
leads to larger area and greater incentive to cheat.

i. Cost differences among firms: The greater these differences, the easier the
justification for a price different from the colluded price. These cost differences
would be due to products differentiation, wherein the seller introduces new product
features, thereby enabling the firm to charge a different price.
ii. Variations in demand: the greater the variations in demand over time, the lesser
the chance that collusion will succeed. This is understandable because the seller will
go all out to make the maximum possible profit during a short but high demand
period.
iii. Detection of cheating: The easier it is to detect cheating, the more successful a
collusion will be. To make detection easier, manufacturers from associations to
monitor the market besides facilitating information and technology sharing.
 ANALYSIS AND FINDINGS

Part of the difficulty in studying cartel success is that it depends on a wide variety of
variables, and these variables are often not independent of one another. These include
traditional structural variables, such as the variance in and concentration of demand, the
structure and homogeneity of costs, and the rate of technological change. Cartel success also
depends on organizational factors, such as the distribution of power within the cartel, its
voting structure, the sophistication of mechanisms for detecting and deterring cheating, and
the ability of the cartel itself to create barriers to entry. Consequently, the conventional
wisdom is that cartels are most likely to arise in markets with a few firms, often considered to
be no more than three or four, that are relatively symmetric.

Cartels, like any institution, do not last forever. While the demise of a cartel is an inevitable
event, when and why collapse occurs is not well understood. Using facts from past cartels
complemented by the development of an equilibrium theory, we hypothesized that some
cartels may have the seeds of their own destruction. Cartels have to solve three problems:
coordination, cheating, and entry. Successful cartels develop organizations that can address
all three problems.
 CONCLUSION AND SUGGESTIONS

Part of the difficulty in studying cartel success is that it depends on a wide variety of
variables, and these variables are often not independent of one another. These include
traditional structural variables, such as the variance in and concentration of demand, the
structure and homogeneity of costs, and the rate of technological change. Cartel success also
depends on organizational factors, such as the distribution of power within the cartel, its
voting structure, the sophistication of mechanisms for detecting and deterring cheating, and
the ability of the cartel itself to create barriers to entry. An often contentious element to
collusion is settling upon a market allocation. A common resolution to this dilemma is to use
historical market shares. While that may have a certain fairness attached to it, it can result in
cartel members initially or eventually becoming discontent as this freezing of the relative
positions of firms can run counter to growth aspirations. This situation can become
particularly acute when a firm expands capacity but growth in market demand is insufficient
to adequately utilize that new capacity. When that arises, the temptation to cheat on the
collusive allocation is accentuated and this can result in the collapse of the cartel.

In any market, firms have an incentive to coordinate their decisions and increase their
collective profits by restricting output and raising market prices. A cartel might also limit
new product introductions or quality improvements, although there is less of a consensus on
the effects of market power on these aspects of competition. Cartel research can provide a
portal into questions such as the nature and speed of concentration, strategic behavior,
differing ideas about legitimate and illegitimate market behavior (competition policy and
regulation), economic thought, comparative law, social policy, economic development, the
boundaries between the state and civil society, business diplomacy, and international
relations. Moreover, if contemporaries truly believed that cartels were useful instruments of
economic and business policy, this alone would contribute to cartel stabilization, unlike the
criminalization of cartels today. We need better comparative studies about cartels’
relationship to politics, political culture, and law for “clearly cartels, directly or indirectly,
served different national objectives”
 BIBLIOGRAPHY

BOOKS

1. Managerial Economics by Suma Damodaran

WEBSITES

1. http://businessjargons.com/oligopoly-market.html
2. http://www.shareyouressays.com/116522/6-main-features-of-oligopolistic-market

3. http://www.economicsdiscussion.net/oligopoly/top-9-characteristics-of-oligopoly-market/7342
4. https://thenextgalaxy.com/the-advantages-and-disadvantages-of-ogligopoly/
5. https://connectusfund.org/oligopoly-advantages-and-disadvantages

6. https://stats.oecd.org/glossary/detail.asp?ID=3183
7. https://en.wikipedia.org/wiki/Bertrand_competition
8. http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_09_05.pdf

9. http://www.opec.org/opec_web/en/
10. https://ib-con.wikispaces.com/file/view/ Characteristics%20of%20Oligopoly.pdf
11. https://business-finance.blurtit.com/93570/explain-the-concept-of-collusive-oligopoly
12. http://www.investopedia.com/terms/p/price-leadership.asp
13. https://are.berkeley.edu/~sberto/DeBeers2008.pdf