1. GROUP NO: 8 Anu Dev Mayank Raj Mohamed Afnas Vishwas Rekha

3. Several factors that will effect the firm ability to monitor a cartel: 1. Number of firms in the industry. 2. Characteristics of the product sold by the firm. 3. Production costs of each members. 4. Behavior of demand. 5. frequency of shares and their characteristics.

4. Cartel v/s oligopoly carteloligopoly Meaning: An explicit, formal agreement between firms in an industry to fix price and production quantity. An economic market condition where numerous sellers have their presence in one single market. Characteristics: A small number of firms dominate the industry. Prices and production quantities are fixed. Product is undifferentiated. A small number of firms dominate the industry. These firms compete with each other based on product differentiation, price, customer service etc.

5. Prices: Unusually high. Prices are fixed by cartel members. Moderate/fair pricing due to competition in market. But much higher than perfect competition (where there is a large number of buyers and sellers) Sources of Power: Market making ability by an explicit agreement between the dominant players in the industry. Market making ability because of very few firms in the industry. Each firm can therefore significantly influence the market by setting price or production quantity. Barriers to entry: Barriers to entry are very high as it is difficult to enter the industry because of economies of scale. Examples: OPEC, lysine cartel, Federal Reserve Health insurers, wireless carriers, beer (Anheuser- Busch and Miller Coors), media (TV broadcasting, book publishing, movies) etc.

6. Problems with cartel: 1.Formation: Each potential member has an incentive to be a free rider. 2.Formation of cartel policy: There may be as many policy proposals as there Cartel member. 3.Entry: High profit provide incentive for new supplier to join the cartel. The cartel Is likely break up if a new member enter. 4. Cheating: Cartel members have incentive to cheat on the agreement.