Experimental visualization of narrower problems
Other Names:
Commodity cartels
Cartels are unions of sellers whose aims are to raise, support or fix prices or affect conditions of sale. They control production, imports or sales by allocating quotas for member's activities. Cartel agreements among firms in developed market-economy countries affect imports into those countries. The restrictive business practices resulting from these agreements directly hamper the interests of other countries, including developing countries, whose normal export development is impeded. The types of cartels distinguished include import cartels, rebate cartels, and agreements on standards. Cartel activities, when they affect the domestic market or foreign trade interests of the developed market-economy countries, are usually subject to the laws providing for controls, which range from prohibition to abuse control. This would seem to be one of the reasons why the known instances of such cartel activities are not considerable in number.
A prime example is the diamond cartel which since the 1920s has controlled production and distribution of diamonds in order to maintain an artificially high market value despite the quantity now produced. The cartel has been successful despite the political difficulties arising from a production base in southern Africa, the need to control production of diamonds in Siberia throughout the cold war period, and the existence of anti-trust legislation in countries such as the USA. The UK, where its principal offices are located, has naturally been reluctant to intervene in such a lucrative worldwide trade.
As world trade becomes concentrarted in fewer hands, every cartel scheme operated by transnational corporations has more extensive impact. National governments trying to maintain some degree of control over trade and monetary policy can ill afford to ignore the machinations of international cartels.
Related Problems:
Economic crime
Collusive tendering
Problem Type:
C: Cross-sectoral problems
Date of last update
11.03.1999 – 00:00 CET