Final answer:
A group of businesses that collaborate to produce similar products is known as a cartel. Cartels aim to control production and prices to maximize profits, but internal competition can thwart their efforts. Historical instances provide evidence of cartels' market manipulation and legal consequences.
Step-by-step explanation:
A group of businesses that work together to produce similar products and maintain certain pricing structures is typically known as a cartel. Cartels are formed when these businesses enter into a formal agreement to collude, aiming to produce the monopoly output and sell at the monopoly price. This cooperation is intended to maximize their collective profits by reducing competition within the market. However, cartels face inherent challenges, as each member may have an incentive to produce more and gain a larger market share, which can disrupt the equilibrium they seek to maintain.
In history, there have been notable examples of cartels like the Beef Trust, where members agreed not to compete in purchasing, thus, artificially lowering cost to their benefit. Furthermore, cases like the international cartel of vitamin manufacturers illustrate how cartels can manipulate production and pricing to the disadvantage of the consumer, leading to legal repercussions once discovered by antitrust regulators.