JAMB UTME - Commerce - 1999 | Green Bridge CBT

One major disadvantage of a cartel is that it

maximizes productive efficiency

brings the merging firms under control

maximizes profit from operation

eliminate competitions and waste

Détails de la réponse

A cartel is a group of firms that agree to coordinate their actions in order to maximize their joint profits. One major disadvantage of a cartel is that it eliminates competition among its members. This leads to a reduction in the incentives for the member firms to improve their productive efficiency and innovate. In addition, the cartel may engage in rent-seeking behavior, such as lobbying for government protection, which can lead to inefficiencies and waste. Therefore, the main disadvantage of a cartel is that it reduces competition and innovation, which can lead to negative outcomes for consumers and the economy as a whole.

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