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Cartels: a Good or a Bad Strategy?

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  • Pop, Izabela Luiza

Abstract

Any organization should seek the efficiency maximization, namely the achievement of an effect/effort ratio as high as possible. In order to apply this economic ground rule, some companies use strategies based on gaining a competitive advantage over competitors. In contrast, other companies choose lighter options to increase profitability. They apply strategies focused on agreements with competitors that aim to maintain prices at a certain level regardless of economic factors governing the market mechanism. The purpose of this paper is to highlight the positive and negative effects of cartels as a management strategy. In this regard, the first part of the article summarizes the most important theories about cartels and their characteristics, while the second part presents some European and Romanian cartels, based on data provided by the European Commission and the Competition Council. The final part presents the most important findings and conclusions but also some recommendations for future research.

Suggested Citation

  • Pop, Izabela Luiza, 2015. "Cartels: a Good or a Bad Strategy?," MPRA Paper 67314, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:67314
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    References listed on IDEAS

    as
    1. Elina Kuorelahti, 2015. "Boom, depression and cartelisation: Swedish and Finnish timber export industry 1918-1921," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 63(1), pages 45-68, March.
    2. Margaret C. Levenstein & Valerie Y. Suslow, 2006. "What Determines Cartel Success?," Journal of Economic Literature, American Economic Association, vol. 44(1), pages 43-95, March.
    3. Margaret C. Levenstein & Valerie Y. Suslow, 2006. "What Determines Cartel Success?," Journal of Economic Literature, American Economic Association, vol. 44(1), pages 43-95, March.
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    More about this item

    Keywords

    cartels; competition; strategies; development; price;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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