Question

there are seven “keys to success” for a cartel. What are they?

Answer 1

the factors which determine cartel success are a large variety of attributes which are inter dependent as well.

first, organizational structure of the cartel implies voting rights in the organization , distribution of power, capability of cartel to create barrier for trade, mechanism for detering by credible threats and detecting cheating practices.

secondly, traditional structural variables like concentration of demand, homogeneous cost and rate of technology are inter related.

thirdly, it depends on the exogeneous factors like government regulation, anti trust laws.

other factors are history related variables like learning curve or spillover effect on the organization which led to cartel design, startup cost of the cartel , reputation of its members.

Thus, both endogeneous and exogeneous factors are responsible for cartel stability and providing incentives and detering with strict punishment can have significant impact on cartel duration