I was talking to a friend the other day about economics when the discussion turned to cartels. He asked what i thought about this issue, my friend (a supporter of government regulations) pointed to RAM manufactures creating cartels when pricing their Memory and Oil. I told him honestly i haven’t given thought to cartels before and will do some research on this.
I consulted the Internet but with the threads i have found, i am still not confident to go into battle. Can anyone here give me a complete Austrian economic outlook on this issue please, or at least point me in the right direction to a good article.
In general, cartels are unstable in a free market and are not likely to exist without protectionist government legislation or as in many cases, directly enforced by government agencies or special privileged agencies.
In theory, such organizations, if existed at all, in the context of a free market would be harmless.
CH 10, part 2 Cartels and their consequences from “Man, Economy, and State”
2. Cartels and Their Consequences (p. 636)
A. Cartels and “Monopoly Price” (p. 636) B. Cartels, Mergers, and Corporations (p. 643) C. Economics, Technology, and the Size of the Firm (p. 645) D. The Instability of the Cartel (p. 651) E. Free Competition and Cartels (p. 653) F. The Problem of One Big Cartel (p. 659) 3. The Illusion of Monopoly Price (p. 661)
A. Definitions of Monopoly (p. 661) B. The Neoclassical Theory of Monopoly Price (p. 672) C. Consequences of Monopoly-Price Theory (p. 675)