Final answer:
For successful cartelization, the cartel must control supply, enabling the members to act as a monopoly and maintain high prices and profits. A kinked demand curve helps to enforce price stability within the cartel.
Step-by-step explanation:
One condition necessary for successful cartelization is that the cartel must control supply. This control allows the cartel members to collectively act as a monopoly, producing the monopoly output and selling at the monopoly price. Such a strategy is aimed at reducing output and keeping prices high. When firms form a cartel, they collude to set a price higher than the competitive equilibrium price, restrict the quantity supplied to increase profits, and earn a higher combined profit than they would in a competitive market.
In the case where a kinked demand curve exists, it can help to stabilize a cartel's pricing: if a firm tries to increase their price, others won't follow, which will drastically reduce the firm's sales, but if a firm lowers their price, the others will match the price cuts, reducing any gain from attempting to undercut the market. Therefore, a kinked demand curve can foster cartel stability by making members reluctant to change prices.