A cartel, as I seemed to remember from my macroeconomics courses, is a group of enterprises and firms working together to limit competition and fix prices.
Why are drug cartels called cartels then, if they compete with each other and engage in gang wars?
In: Economics
It’s like a monopoly or conglomeration of corporations, but there is no legal paperwork tying the “companies” together.
Instead it’s better described as a group of independent businesses opting to work together on pricing and territory instead of competing against each other. There’s no legal obligation to avoid betraying the arrangement, just an informal social convention for mutual gain.
Since there’s no legal framework tying the different “Companies” together, it’s not a proper corporation or organization that can be sued or pursued legally for damages.
When someone steps out and breaks the convention, social implications may follow, and competition between the independent companies will resume. This creates competitive turmoil (gang wars, territory fights) until one “Company” wins out or a new co-habitation/Cartel agreement can be arranged.
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