Google
Saturday 
October 1, 2022 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
AD VALOREM TARIFF: A tax on imports that is specified as a percentage of the value of the good or service being taxed. This is one form of trade barrier that's intended to restrict imports into a country. Unlike nontariff barriers and quotas, which increase prices and thus revenue received by domestic producers, an 'ad valorem tariff' generates revenue for the government. For example: a 15 percent ad valorem tariff on a TV set worth $100 would pay a tariff of $15. One advantage of an ad valorem tariff is that it keeps up with changes in prices (mostly inflation).

Visit the GLOSS*arama


CARTEL:

A formal agreement between businesses in the same industry, usually on an international scale, to gain market control, raise the market price, and otherwise act like a monopoly. The most famous international cartel is the Organization of Petroleum Exporting Countries (OPEC), which seeks to exert control over the world oil market. Other cartels have existed, or still exist, in the global markets for uranium, diamonds, long distance telephone services, and airlines.
A cartel is a formal arrangement by firms in industry that is designed to monopolize the market. It is most often seen on an international scale where the "firms" are actually governments of individual countries that control the production of a good or resource. A cartel is an example of explicit collusion.

The most noted example of a cartel, international or otherwise, is the Organization of Petroleum Exporting Countries (OPEC). OPEC is an international organization of more than a dozen nations, primarily located in the Middle East, but also in Africa and Central America, that controls a sizeable portion of the world's petroleum reserves. This control of reserves gives it a great deal of influence over the petroleum market.

However, other lesser known international cartels exist or have existed recently in the markets for steel, uranium, assorted chemicals, international long distance telephone service, and international air transportation.

International cartels come in three varieties:

  • Private Firm Cartel: This form of cartel includes two or more private firms from two or more different countries that seek to control the market for a particular good. This market can be domestic or foreign. A private firm cartel epitomizes secretive explicit collusion among firms. Such cartels are inevitably illegal and are often prosecuted by domestic law enforcement agencies.

  • Export Cartel: This type of a cartel includes two or more private firms in a particular county, often an industrial trade group, that seek to control the exports to, and markets in, another country or other countries. These cartels are often exempt from domestic antitrust laws and might even be encouraged by domestic governments.

  • Government Cartel: This form of cartel is exemplified by OPEC and includes the governments of two or more countries that seek to control the market for a particular good. These cartels, like most international organizations, often seek multiple economic, political, and social objectives. That is, they might not control the market exclusively for profit and economic gain, but maybe to gain political favor from other countries.
Whatever form a cartel takes, like any collusive arrangement it is susceptible to instability. A cartel tends to be unstable because the artificially high price that it sets gives each member of the cartel an incentive to "cheat" by offering a slightly lower price. If only one member of the cartel sells at a lower price, then it can make oodles of extra profit by taking customers away from the other members. If all members of the cartel cheat, then the cartel falls apart, at least until cartel authority is reestablished.

Some cartels are able to prevent member cheating and maintain market control for extended periods (decades or even centuries). Other cartels are less successful and fall apart over a shorter time span.

<= CARDINAL UTILITYCAUSE AND EFFECT =>


Recommended Citation:

CARTEL, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: October 1, 2022].


Check Out These Related Terms...

     | collusion | explicit collusion | implicit collusion | merger | conglomerate merger | horizontal merger | vertical merger |


Or For A Little Background...

     | oligopoly | oligopoly, behavior | oligopoly, characteristics | industry | market structures | market control | firm | industry | competition among the few | short-run production analysis | profit maximization | production |


And For Further Study...

     | market share | concentration ratios | four-firm concentration ratio | eight-firm concentration ratio | barriers to entry | product differentiation | game theory | kinked-demand curve | kinked-demand curve analysis | collusion production analysis | collusion, efficiency |


Search Again?

Back to the WEB*pedia


APLS

BLUE PLACIDOLA
[What's This?]

Today, you are likely to spend a great deal of time driving to a factory outlet trying to buy either a pair of blue silicon oven mitts or a coffee cup commemorating the 2000 Olympics. Be on the lookout for crowded shopping malls.
Your Complete Scope

This isn't me! What am I?

Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
"The truth is not for all men, but only for those who seek it. "

-- Ayn Rand, writer

APEC
Asia-Pacific Economic Co-operation
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2022 AmosWEB*LLC
Send comments or questions to: WebMaster