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Norma JoAnn Blythe, age 14 of Kalispell, Mont., for her question:

WHAT IS A CARTEL?

A cartel is an association of independent businesses that are in the same field. The group is organized to control a segment of the market.

Many cartels agree to sell their goods at certain prices in order to keep prices at a certain level. Often they also divide the market into zones where various members may sell their goods and also operate a joint selling agency for members.

International cartels deal mainly in the heavy industries such as mining, chemicals, fuels and transportation. They also control such important products as rubber, drugs, quinnine and optical instruments. These cartels have been known to raise prices, split up world markets and stifle competition.

The term cartel came into use in Germany about 1880. Cartels reached their peak of development in Europe, especially in Germany, during World War II. Many European countries encouraged cartels and enforced their contracts.

In the United States, organizations of this type are often called pools or sometimes even trusts. A trust differs from a cartel in that it is an organization that controls other organizations rather than an association of independent firms.

 

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