Features of Cartel in Business Combination - QS Study
QS Study

Features of Cartel in Business Combination

The cartel is an alliance of producers who combine together retaining their identities for the purpose of perusing a monopolistic policy in their joint efforts. Normally it is a voluntary agreement between the associations or independent enterprises of similar types to secure a monopoly often market.

Mainly it is formed as a savior of its members from detection is given up and enters upon a purely capitalistic career and to maximize proton by abounding an artificial increase of prices up to a point where consumers shall not stop buying and foreigners shall not be edible to take the market. There are some common features of the cartel which differentiate cartel from other business combination. Main features are discussed below:

Monopolistic Market: An important feature of the cartel is the monopolization of market so that other non-member units may not resort to price competition. Then they can capture the whole market.

Voluntary organization: Cartel is a voluntary organization of business combination some organizations producing the same kind of product combine themselves voluntarily to make a cartel.

Horizontal combination: The cartel is a goose type of horizontal combination bat it is mane rigid than pool form of combination. This is primarily formed to eliminate competition in order to maximize profit and control market.

Determination of production quota: The members of cartel usually limits its function of producing and selling and other functions related to selling by the quota system of eternal management which is entrusted to the individual units.

Control of price: Cartel controls the supplement of products and services to the market. Thus they can control the price of the products or services. So it is seen that cartel has full control over the price of the products in the market.

Independent entity and management: The member of the cartel has the independent entity and management. Thus they enjoy full freedom to manage the organizations and control them.

So many organizations come forward to create a combination of a cartel to produce same products proportionately and to control market competition have the above-disused features must.