What is the primary goal of a cartel in an industry?

The primary goal of a cartel in an industry is to reduce or eliminate competition among its members. This is typically achieved by coordinating actions such as fixing prices, limiting production, or allocating market shares. By doing so, the cartel members can collectively act like a monopoly, increasing their market power and ultimately their profits. Step 1: Understand what a cartel is. A cartel is a formal agreement among competing firms to control prices or exclude entry of a new competitor in a market. It is a form of collusion. Step 2: Evaluate the given options based on the definition of a cartel. "To maximize individual firm profits": While individual firms join a cartel to increase their profits, the cartel's collective action is aimed at controlling the market, which then allows for higher profits for its members. This is an outcome, but not the primary mechanism or goal* of the cartel's formation. "To increase production efficiency": Cartels generally do not focus on increasing efficiency. In fact, by reducing competitive pressure, they can sometimes lead to less* efficiency. "To eliminate competition by fixing prices": This is a core function and primary goal of a cartel. By agreeing on prices, members avoid price wars and maintain higher prices, effectively eliminating price competition among themselves. This leads to higher profits for the cartel members as a whole. "To promote innovation": Cartels typically do not promote innovation. Reduced competition often lessens the incentive for firms to innovate. Step 3: Identify the most accurate primary goal. The most direct and primary goal of a cartel is to eliminate competition, often through price fixing, to gain market power and increase collective profits. The correct option is To eliminate competition by fixing prices. The final answer is To eliminate competition by fixing prices Send me the next one 📸