Cartels undermine market competitiveness from "summary" of The Antitrust Paradox by Robert Bork
Cartels, through their collusion and price-fixing activities, distort the competitive forces at play in the market. By working together to set prices or limit production, cartel members are able to artificially inflate prices and restrict output. This results in a reduction in consumer welfare as prices are higher than they would be in a competitive market. Moreover, cartels inhibit innovation and efficiency by discouraging individual firms from investing in research and development or improving their production processes. When firms are guaranteed profits through cartel arrangements, there is less incentive for them to innovate and strive for greater efficiency. This harms not only consumers who miss out on potential new products or cost-saving technologies but also the overall economy, which relies on innovation for growth. In addition, cartels can create barriers to entry for n...
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