Final answer:
The success of cartels has been limited by strong government support, high entry barriers, and cheating among cartel members.
Step-by-step explanation:
In the context of cartels, the success of cartels has been limited by several factors. These include strong government support, high entry barriers, and cheating among cartel members. Let's explore each of these factors:
- Strong government support: When cartels operate in an environment with strong government regulations and enforcement, it becomes difficult for them to carry out their collusive practices. Governments often have antitrust laws in place to prevent cartels from dominating the market and harming competition.
- High entry barriers: Cartels face challenges when there are significant barriers to entry in the market. These barriers can include high initial investment costs, strict licensing requirements, or extensive regulatory hurdles. These barriers make it difficult for new firms to join the market and potentially disrupt the cartel's control.
- Cheating among cartel members: Cartels rely on cooperation and adherence to collusive agreements among their members. However, the temptation to cheat and seek individual gains can undermine the cartel's stability and effectiveness. Members may secretly increase production or lower prices to gain a competitive advantage.
Overall, these factors limit the success of cartels and contribute to their eventual breakdown or inefficiency.