Opec Consultation

Rebecca Morales


JANUARY 16, 2011

To begin let me start by defining what a monopoly, oligopoly and cartel are. A monopoly is any business, company, organization or firm that is the sole producer/seller in any given market. You usually see monopolies with companies that supplies electricity or phone service to an area. Those companies have complete control of the customer base in that particular market.
When you have a monopoly your are going to make a lot money and be a lot more profitable than a company with competitors. Monopolies are not viewed favorably by most because it they can raise their prices to whatever levels they want because there is no competition, no alternative. Microsoft is the biggest culprit of operating a monopoly they control nearly the entire market for computer software and operating systems

Conversely a cartel works differently than a monopoly. In cartels you have a group of sellers that come to an agreement on what prices will be, how much will be produced and who gets what percentage of the market. Cartels are illegal in the United States. One of the most infamous cartels are those in the drug trade in particular cocaine. Colombian cartels control over 70% of all cocaine into the United States according to the U.S Drug Enforcement Agency (DEA)

In comparison to cartels, oligopolies have a limited amount of produces/sellers that don’t fix a price or limit output. In the strictest form an oligopoly will have goods and services that are identical across all of it’s participants. One of the more common (and probably most recent) oligopoly is cell phone service providers. While some claim more coverage or some other minor distinction they are all identical, providing the same service.

When distinguishing the welfare effects of monopolies and oligopolies one must first examine the differences and similarities and how they relate. Monopolies and oligopolies put consumers at an alarming price disadvantage....