The Impact of Cartels on National Economy and Competitiveness by unknow

Author:unknow
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Studies have shown that a cartel can have not only exploitative effects directed against buyers and suppliers but also exclusionary effects directed against new non-cartel firms or product substitute firms willing to enter the market. Page (1980) notes that cartel’s exclusionary practices can be directed against the potential rivals (willing to enter a new market) and the existing ones. In the first case potential rivals do not enter the market for a variety of reasons: creation of barriers to market entry, control of resources by a cartel member, etc. In the second case the predatory behaviour of cartel firms either excludes existing rivals from the market or reduces their share. Failure to create new jobs and attract investments to the region, downsizing and bankruptcies of enterprises create considerable economic and social tension in a region or in a country.

Hence, since studies (Dumčiuvienė et al. 2011; Porter 1990) have shown that national and regional competitiveness is directly related to business development via the competitiveness of enterprises themselves and the creation and sustention of competitive advantage for them, it can be concluded that by affecting both the customers and the enterprises themselves (the strategies, development trajectories and organisational forms of cartel and non-cartel firms) and the operational environment of economic operators, cartels directly affect national and regional economies and competitiveness. It cannot be unambiguously stated that cartel’s adverse effects on market actors and conditions has only a negative impact on economy and competitiveness as cartels often have multifaceted effects causing after-effects. This means that a cartel can produce both a negative and a positive impact (even though occasionally) on economy and simultaneously on competitiveness which requires an integrated analysis of the cartel impact on a case-by-case basis.

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