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MENTAL MODEL · M0127

Cartel

Cartel
BusinessHigh supportEconomics
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

A cartel (French: Cartel; German: Kartell), also known as a monopoly alliance, monopoly interest group, enterprise union, trade alliance, or industry federation, is a form of monopoly group. It easily occurs when a few resources are completely controlled by several enterprises. To avoid the overall decline in benefits caused by excessive competition, an alliance is formed by a series of enterprises producing similar products, which is a manifestation of cartel monopoly organizations. Through certain agreements or regulations, or even consensus alone, the output and price of the product are controlled, but the member enterprises remain independent in production, operation, and finance, which causes the inherent instability of cartels. For example, a national steel industry association that negotiates the price and quantity of imported iron ore through a 'long-term purchase agreement' is an industry procurement cartel. For example, OPEC is a cartel where some oil-exporting countries coordinate product and price.

SCAFFOLDING EFFECT

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A cartel (French: Cartel; German: Kartell), also known as a monopoly alliance, monopoly interest group, enterprise union, trade alliance, or industry federation, is a form of monopoly group. It easily occurs when a few resources are completely controlled by several enterprises. To avoid the overall decline in benefits caused by excessive competition, an alliance is formed by a series of enterprises producing similar products, which is a manifestation of cartel monopoly organizations.

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Oligopolistic enterprises collude through agreements to restrict output/raise prices to obtain excess profits, but because each member has the incentive to secretly increase production for profit (prisoner's dilemma), cartels are naturally unstable, prone to breaking down or requiring strong supervision.

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E5%8D%A1%E7%89%B9%E5%B0%94ZH · Explicit
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