Stakeholders= A person, group or organization that has interest or concern in an organization.

Cartel= when firms join together and engage in price-fixing agreements.

Cartels aim to maximize profits and allow firms to act as if they were in a monopoly situation.
They charge high prices and produce less output. Many governments see cartels as against
consumer interest, so make cartels illegal.
Oligopoly= when few sellers dominate the market. Interdependent to each other in what one
does influence others.
Characteristics:
Only a few firms supply the entire market.
Product differentiation - products are similar but small innovations make them unique from
competitors products.
Strong barriers to entry (difficult for new firms to enter the Market)
Interdependence - one firms actions will influence another firms actions and market conditions
(or profits, revenue, costs etc.)
They provide strong incentives for collusion because if the firms 'team up' (form a Cartel) they
can generate monopoly profits. For instance, when firms are not part of a cartel, they operate as
if they are in a competitive market, where MC=AR However, in a cartel they must all collude to
set prices and output as if they were a monopoly, where MC=MR. Because there are high
barriers to entry in the market, new firms can't enter the market and supply customers at
competitive prices and hence oligopolies can generate what economists call supernormal profit
by raising prices above the market rate and restricting output (as seen on a oligopoly diagram)
Due to the competition commission (market regulator), many oligopoly industries don't often
practice collusive behaviour because they could be caught and heavily fined. However, some
examples of collusion in the past in the UK have been the banking industry and the four major
supermarkets in the UK (Asda, Sainsburys, Tesco and Morrisons) colluding on the price of milk.
Costs and benefits:
Costs: consumers must now pay a higher price and less output is supplied to the market.
Consumers don't benefit from new innovative products (lack of competition forcing firms to not
think of new ideas)
Cutting output means to cut production, this COULD lead to less labour employed in the

industry.
Benefits:
firms that collude will gain higher profits (benefit for the firm only)
Higher profits generated from the higher price, if reinvested into research and development
(R&D) could lead to new innovative products entering the market.