What is a characteristic feature of a cartel?

A characteristic feature of a cartel is price fixing. A cartel is a group of independent market participants who work together to control prices, limit production, or restrict competition in order to maximize their collective profits. By agreeing to set prices at a certain level, members of a cartel can effectively eliminate the competition that would otherwise drive prices down.

Price fixing restricts the competitiveness of the market and allows cartel members to benefit from higher profit margins than they would in a fully competitive environment. This behavior often leads to significant market distortions and can result in regulatory actions from governments that seek to maintain fair competition.

In contrast, price cutting encourages competition and lower prices, which goes against the fundamental objective of a cartel. Increased competition undermines the very existence of a cartel, as it would introduce new players into the market that could destabilize agreed-upon price levels. Similarly, market deregulation typically allows for more competition and less control over pricing, making it antithetical to the purpose of a cartel.