Commodity cartels
Commodity cartels: public or private cartels formed to maintain the price of a commodity above what it would fetch on open markets. The usual mechanisms are the imposition of export quotas and collusion to maintain prices above real market levels. Such cartels can only be successful if they include all of the important producers and if no commodity can be readily substituted. OPEC was a successful cartel for more than a decade, but its ability to keep prices up led to the entry of higher-cost producers into the market. The international diamond cartel based in South Africa has also operated profitably for many years, but it is being challenged increasingly by diamond producers selling on alternative markets. See also commodity policy, international commodity agreements, international steel cartel and resources diplomacy.
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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