Cartel agreements are forbidden in most countries around the world because they restrict competition, inflate prices, and harm consumers. However, some businesses still choose to form cartels because they are attracted to the prospect of earning greater profits and avoiding competitive pressures. Despite the risks of getting caught and facing severe penalties, some cartel members still feel the incentive to cheat on their agreement. In this article, we will explore the reasons why businesses are motivated to cheat on cartel agreements.

1. The Desire for Greater Profits

One of the most common reasons why businesses cheat on cartel agreements is the desire for greater profits. Even though the members of a cartel agree to fix prices and limit supply, some members may still want to earn more money than others. When one member of the cartel sees an opportunity to increase their own profits, they might choose to cheat and violate the terms of the agreement.

2. Competitive Pressure

Another reason why businesses are motivated to cheat on cartel agreements is competitive pressure. Even though the members of a cartel agree to avoid competing with each other, there may still be intense pressure to capture market share. Companies might be unwilling to give up profits to other members of the cartel, and so they cheat in order to gain a competitive advantage.

3. Opportunistic Behavior

Businesses may also cheat on cartel agreements due to opportunistic behavior. This happens when a company is presented with a chance to make more money than the cartel agreement allows. For instance, a company might receive an unexpected large order or have a temporary advantage in the market. If they perceive that they won`t get caught, they might violate the cartel agreement.

4. Lack of Trust

Finally, a lack of trust can be another reason why businesses cheat on cartel agreements. Even though the members of a cartel are legally bound to follow the agreement, they may not trust each other. If one member perceives that another member is not following the agreement, they may also choose to cheat in order to protect themselves.

Conclusion

In conclusion, businesses are motivated to cheat on cartel agreements due to the desire for greater profits, competitive pressure, opportunistic behavior, and a lack of trust. The risks of getting caught and facing severe penalties may not be enough to deter some companies from violating the terms of the agreement. As such, it is important for antitrust authorities to closely monitor these agreements and take swift action against businesses that cheat. This will help maintain healthy competition in the market and protect consumers from price gouging.