Economics

The situation in the European air cargo industry bears many hallmarks of a cartel, and this was the finding of the European Commission. The OECD (2002) defines a cartel as "a formal agreement among firms in an oligopolistic industry…on matters such as price, total industry output, market shares, allocation of customers, allocation of territories, bid-rigging, division of profits or the establishment of common sales agencies." The main difference between this definition and the behavior of the airlines in question is that the industry is not oligopolistic in the true sense of the word. In an oligopoly, there are only handful of industry players, so any such collusion as indicated in the definition of a cartel would serve to disrupt market forces to the benefit of the companies within the oligopoly. In air freight, however, the prevailing market condition was that of monopolistic competition. This makes is harder to prove...
[ View Full Essay]