The oligopoly in the cartel state is equivalent to the complete monopoly model
The equilibrium condition is MR=MC
MR is located below the demand curve. Generally speaking, there is Excess profits
The price is determined by the cartel organization according to the monopoly model, and the output is determined by the agreement
The cartel model (Cartel) is a formal collusion behavior that can make a competitive The sex market has become a monopoly market, a special case of oligopoly market. The cartel takes the expansion of overall interests as its main goal. In order to achieve this goal, a series of agreements will be entered into within the cartel to determine the output and product prices of the entire cartel, designate the sales volume and sales area of ??each enterprise, etc. . Cartels are often international.
For example, OPEC, the cartel is an international agreement between the governments of oil-producing countries, and it has successfully raised world oil prices for more than a decade to levels far higher than they would have otherwise been. Other international cartels that have successfully raised prices include: in the mid-1970s, the International Bauxite Federation quadrupled the price of bauxite; and a secretive international uranium cartel raised the price of uranium. One cartel, known as Mercury Europe, keeps mercury prices close to monopoly levels; another international cartel has maintained a monopoly on the iodine market. However, most cartels have failed to raise prices.
An international copper cartel operates to this day, but it has never had a significant impact on copper prices. Cartels that tried to raise the price of tin, coffee, tea and cocoa also failed.
Model types
1. Price cartel. This is the most common and basic form of cartel. Cartels maintain a particular price: a monopoly on high prices, stable prices in bad times, or price cuts to squeeze out non-cartel firms.
2. Quantity cartel. Cartels control production and sales to reduce market supply and ultimately increase prices.
3. Sales conditions cartel. A cartel that stipulates sales conditions such as rebates, payment terms, after-sales services, etc. in the agreement.
4. Technology cartel. A typical form is a patent pool, that is, a cartel in which member companies provide each other with patents and use each other's patents freely, but do not allow non-member companies to use these patents.
5. Tiga. A special unified sales cartel refers to a group of member companies jointly investing in the establishment of a sales company to implement unified sales, or the cartel buys the products of all member companies and then sells them uniformly. Such as the De Bell Diamond Cartel.