Question

A cooperative pool formed by oligopolists to set prices at artificially high levels is known as a(n) ______.

   A cooperative pool formed by oligopolists to set prices at artificially high levels is known as a(n) ______.

Introduction to agricultural economics

Introduction to agricultural economics

John B. Penson,… 7th Edition

Chapter 9, Problem 20

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The question asks for the term used to describe a situation where a group of oligopolists (a few companies that dominate a market) come together to set prices at artificially high levels. This is a strategy to maximize their profits by controlling the market Show more…

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A cooperative pool formed by oligopolists to set prices at artificially high levels is known as a(n) ______.

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Key Concepts

Oligopoly

An oligopoly is a market structure where a few firms dominate the industry. These firms are interdependent, meaning the actions of one firm directly affect the others. The limited competition often makes it easier for these firms to engage in strategic behavior, such as price fixing or collusion, which can lead to market outcomes that are less competitive and less efficient than in markets with many competitors.

Cartel

A cartel is an agreement among competing firms in an oligopoly to coordinate their activities, most often to set prices at higher levels or to restrict output. By colluding rather than competing, the members of a cartel aim to maximize their collective profits, which can lead to artificially high market prices and reduced incentives for innovation. Cartels are typically illegal in many jurisdictions because they undermine free market principles and harm consumer welfare.

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