Historically, the term "
cartel" has been used to describe the Latin American drug trafficking organizations of the 1970s. The term has now been extended to include all illegal enterprises operating in ways similar to firms.
In the context of international trade, the term "
cartel" refers to groups of firms that enter into anticompetitive agreements. The aim of a
cartel is to allow the firms participating in the collusion to achieve higher gains than what would happen in a competitive market. They can do so by restricting output, allocating markets or agreeing to raise prices directly.
Cartels are prohibited in most countries because of their anti-competitive effects.
(adapted from the Institute for Trade and Commercial Diplomacy,
Cartel,
Glossary, visited 2011-02-15)