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Word of the Day: Cartel
At the end of February, Mexico erupted into violence after Mexican authorities killed an important and powerful cartel leader.
Everybody understands this guy was a drug lord.
But do you know what a cartel is?
Sometimes, criminal organizations form a cartel to control illegal activities, such as drug trafficking.
In this case, a cartel is a group that works together to avoid fighting among themselves and to make more money from crime.
In the world of business, a cartel is a group of independent companies or organizations that work together to control prices, limit production, or divide markets.
It’s also criminal.
The main purpose of a cartel is to reduce competition and increase profits for its members.
Cartels are common in industries with only a few large companies, such as oil, gas, or coffee production.
The most famous example of a cartel is OPEC, the Organization of Petroleum Exporting Countries.
OPEC is a group of oil-producing countries that decides how much oil to produce and sell.
This is a classic example of a cartel, as members work together to control the oil market.
Governments often do not allow cartels because they are unfair to customers.
When a cartel practices price-fixing, people usually end up paying more.
For example, if a group of coffee producers forms a cartel, they can agree to raise coffee prices across the market.
This hurts consumers who have no other option but to buy at the higher price.
Finally, a cartel is a group that coordinates to control a market or activity, usually to increase profits and reduce competition.
Understanding this can help you recognize when companies or groups are not competing fairly.
Next time you hear the word cartel, remember it’s not only drug lords who work together to control something important.
Flesch-Kincaid Readability Test
This post is understandable by someone with at least a 7th-grade education (age 12).
On the Flesch-Kincaid reading-ease test, this post scores 70.
The easier a passage is to read, the higher the score on a scale of 0 – 100.
