An agreement is an agreement between competing companies to obtain higher profits. Agreements generally occur in an oligopolistic industry where the number of sellers is low and the products marketed are homogeneous. Cartel members can agree on price fixing, total industry production, market share, customer distribution, allocation of territories, supply manipulation, creation of common distribution agencies and profit sharing. Gambling theory suggests that cartels are inherently unstable because the behaviour of cartel members is a prisoner`s dilemma. Any cartel member would be able to make a higher profit, at least in the short term, by breaking the agreement (a larger quantity produced or sold at a lower price) than it would under the agreement. However, if the deal collapses because of resignations, companies will return to competition, profits would go down and things would be worse. Whether cartel members choose to defraud the cartel depends on the fact that the short-term revenues from the fraud outweigh the long-term losses resulting from the eventual bankruptcy of the cartel. It also depends in part on the difficulty for companies to monitor compliance with the agreement by other companies. If surveillance is difficult, it is likely that a member will get away with fraud for longer; Members would then be more likely to cheat and the agreement would be more unstable. Math Revolution Webinar: “Must-know” Basic Geometry concepts for GMAT Math The AmosWEB GLOSS-arama is a database of 2000 economic concepts and concepts. GLOSS-Arama entries range from A (“a” — vertical interception of a straight line) to Z (“zoning” – legal restrictions on the location of an activity).

Don`t miss the special! 20% discount for all courses of the math revolution on demand! Find out how to use the 5 common traps in GMAT Critical Reasoning with CrackVerbal (free session) Perhaps the best known and most effective cartel in the world is OPEC, the Organization of Petroleum Exporting Countries. In 1973, OPEC members reduced their oil production. As we know that middle Eastern crude oil had few substitutes, the profits of OPEC members exploded. From 1973 to 1979, the price of oil increased by $70 per barrel, a figure not seen at the time. However, in the mid-1980s, OPEC began to weaken. The discovery of new oil deposits in Alaska and Canada introduced new alternatives to Middle Eastern oil, sending OPEC prices and profits down. At about the same time, OPEC members began cheating in an attempt to increase individual profits. On the steps of the town hall in the Shady Valley, there seems to be disruption.

Why it`s twins Donna and Rhonda who are once again looking at another of their long and too-sharp political quarrels.