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Negative Effects Of Cartel Innovation

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Mr. Monti (2000) said in his speech on 3rd Nordic Competition Policy Conference that cartels are “cancers on the open market economy” and “by destroying competition, they cause serious harm to our economies and consumers”. This is because, cartel members, instead of competing with each other, rely on each others' agreement, which reduces their incentives to provide new or better products and services at competitive prices. As a consequence, their clients end up paying more for less quality. This is why cartels are illegal under EU competition law and why the European Commission (EC) imposes heavy fines on companies involved in a cartel. The EC states that between 1992 and 2004, 17 companies coordinated the sales price for bathroom fixtures …show more content…

The process of scientific and technical cooperation within the cartel developed for forty years. During this time there have been several forms of cooperation: standardization, committed to sharing the results of research, co-investment etc. The consequences of the existence of the cartel innovation that combines cable manufacturers have been contradictory. On the one hand, its actions produced positive effects: cost-sharing on experiments and experiences contributed to the spread of innovation. The existence of the cartel gave the company the opportunity to continue improving technology. On the other hand, by promoting one innovation, the cartel could also hinder the advancement of another, especially prohibiting companies to use research results freely, without the consent of all …show more content…

Perfect competition compare to monopolistic competition is very sensitive to changes in demand; as a result it leads to cheaper production costs and slows price growth. Competition aligns the rate of return on capital and the level of wages in all sectors of national economy. The fierce competition in the domestic market led to better competition among international firms, as competitive products must have the consumer properties, comparable to similar products, and yet still stand out among other

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