Business Finance
Mergers and Acquisitions

What is a cartel and is such merger profitable?

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Wiki User
March 24, 2009 5:15AM

A cartel is a joing of all business of same sort to form a single business. Cartel mergers are profitable. For example there are three firms which behave as a cartel, if all firms collude to act as a single firm, the merger will be profitable in oligopolistic industries. It will ensure the firm will gain an economic profit and will eventually drive off the weaker firm and the price benifit will go to consumers. (Term cartel is used when similar businesses merge to form a single business, a monopoly).