There are two instruments that a cartel can use to control prices:
- Explicitly agree on a price level with the other companies that are included in the cartel. This price is usually larger than the price resulting from competition in free markets. By following the agreement, the cartel companies can increase their profits, if compared to the competitive scenario.
- Establish production quotas which consists on limiting the quantity that each of the companies that form the cartel can produce. Certain scarcity is preserved, so that if the supply is larger than the demand. The market price of the product will rise and allow the producers to generate greater profits than in a perfectly competitive environment.