Decartelization is the transition of a national economy from

monopoly A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a speci ...

control by groups of large businesses, known as

cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mo ...

s, to a

free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...

economy. This change rarely arises naturally, and is generally the result of regulation by a governing body with monopoly of power to decide what structures it likes. A modern example of decartelization is the economic restructuring of

Germany Germany, officially the Federal Republic of Germany (FRG),, is a country in Central Europe. It is the most populous member state of the European Union. Germany lies between the Baltic and North Sea to the north and the Alps to the sou ...

after the fall of the

Third Reich Nazi Germany (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") (officially known as the German Reich from 1933 until 1943, and the Greater German Reich from 1943 to 1945) was ...

in 1945. To truly understand the term "decartelization" requires familiarity with the term "cartel". A cartel is a formal (explicit) agreement among firms. Cartels usually occur in an oligopolistic industry (

oligopoly An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result fr ...

), where there are a small number of sellers, and usually involve homogeneous products (see

Homogeneity and heterogeneity Homogeneity and heterogeneity are concepts often used in the sciences and statistics relating to the uniformity of a substance or organism. A material or image that is homogeneous is uniform in composition or character (i.e. color, shape, siz ...

). Cartel members may agree on such matters as

price fixing Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...

, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies (

sales agents Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...

), and the

division of property Division of property, also known as equitable distribution, is a judicial division of property rights and obligations between spouses during divorce. It may be done by agreement, through a property settlement, or by judicial decree. Distributio ...

or profits or combination of these. The aim of such collusion is to increase individual member's profits by reducing competition. Competition laws forbid cartels. Identifying and breaking up cartels is an important part of competition policy in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to collude on paper.

Historical background

Examples of alleged and legal cartels: * American Telephone & Telegraph (AT&T) controlled all telephone systems in the United States via a network of subsidiaries, the Bell System, which was broken up in 1982. *

De Beers De Beers Group is an international corporation that specializes in diamond mining, diamond exploitation, diamond retail, diamond trading and industrial diamond manufacturing sectors. The company is active in open-pit, large-scale alluvial and ...

settled charges of price fixing in the diamond trade in the 2000s. (See

De Beers antitrust litigation The De Beers diamonds antitrust class action sought to end an alleged 60-year conspiracy to fix the price of rough diamonds in the U.S. by the De Beers group of companies. The litigation includes several cases including ''Hopkins v. De Beers Cente ...

Debate

The general debate with decartelization is a national economy controlled by monopolies and cartels, versus a free market economy. With a free market economy, the pros are very clear. It encourages individual initiatives; it determines price of goods through

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, ind ...

, and motivates people to work towards financial independence. Most individuals would prefer a free

market economy A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers ar ...

, where there are many buyers and sellers in each market, and the prices are determined based on competition alone. The problem is, it is not up to the individuals. In most cases of cartels, these secret arrangements are done "under the radar", and these major companies know how to cover their tracks. It is very difficult to prove that companies have formed a cartel; therefore it is very difficult to dismantle one. In the case with the

in Germany, the people had no choice. During the war, there was a school called , the "social conscience free market". Members of this school hated

totalitarianism Totalitarianism is a form of government and a political system that prohibits all opposition parties, outlaws individual and group opposition to the state and its claims, and exercises an extremely high if not complete degree of control and reg ...

and had propounded their views at some risk during the Nazis' rule. Wrote Henry Wallich, "During the Nazi Reich period the school represented a kind of intellectual resistance movement, requiring great personal courage as well as independence of mind." The school's members believed in free markets, along with some slight degree of progression in the

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

system and government action to limit monopoly.

References

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External links

* http://eh.net/bookreviews/library/0934 * http://www.ushmm.org/wlc/article.php?lang=en&ModuleId=10005141 * https://books.google.com/books?id=bNa982ALww0C&pg=PA287&lpg=PA287&dq=decartelization&source=web&ots=H-l6keX60O&sig=phk9iVFEXfiRia__qz010KU_IXE&hl=en#PPA286,M1 Cartels Competition (economics) Monopoly (economics)