What is cartel cycles?

Cartel cycles refer to the repeating patterns of cooperation and conflict among members of a cartel. Cartels are formed by producers of a certain commodity who collude to limit production and raise prices. These cycles are driven by the economic interests of the cartel members and external factors such as changes in demand, government regulations, and technological advances.

During the cooperation stage, cartel members work together effectively to enforce production quotas, maintain high prices, and share profits. This stage is often associated with increased market stability and reduced competition. However, as prices rise, production in non-cartel countries may also increase, leading to a decline in demand and reduced profits for the cartel.

Conflict arises when members of the cartel begin to cheat on agreed-upon quotas or undercut prices to gain market share. This can lead to a collapse of the cartel and a return to competitive market conditions. Alternatively, cartel members may choose to renegotiate agreements and continue cooperation, or new leadership may emerge to enforce stricter cartel controls.

Cartel cycles can vary in length and intensity depending on the industry, market conditions, and political factors. They can also have significant economic impacts on consumers and businesses, particularly in industries where cartel pricing is a major factor in the cost of goods.