What are disadvantages of cartel?

Answer 1

There are always incentives to cheat in a cartel. You should look up Nash Equilibrium and Game theory to get a full overview of how cheating might make the cheater better off, giving them an incentive to cheat. Another disadvantage would be that it would create higher prices and, at times, lower output levels, putting the economy behind full employment equilibrium level of output, and inside the PPC of the economy. A cartel usually affects the oligopoly to make it behave like a monopoly in some ways. OPEC (organization of petroleum exporting countries) is one of the most well-known examples of a cartel. It is also illegal to form cartels in many nations (ex: US)