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Cartels are unstable by their nature, OPEC is the exception not the rule. Cartels can only thrive when there is a lack of competition and strong enforcement bet
by pg_bot 9y ago
Cartels are unstable by their nature, OPEC is the exception not the rule. Cartels can only thrive when there is a lack of competition and strong enforcement between member nations. There is a reason why we don't hear of coal or natural gas cartels which are substitute goods for oil.
- cirgue 9y agoEven OPEC is not much of an exception: they've only occassionally been effective at coordinating outputs, and supply dynamics typically overwhelm OPECs ability to respond.
- Kadin 9y agoOPEC is definitely an exception in that it stayed together even though there are multiple times when it wasn't clearly in any of the members' economic best interests to participate or maintain the cartel's supply control. This is pretty obviously because it's a political rather than economic organization: the member states have political reasons for wanting to remain in control of the supply which probably exceed the rational reasons for pursuing revenue maximization. It seems unlikely that the countries with significant lithium reserves have enough in common politically, to maintain a similar cartel. Not that some might not try. But they will also have to deal with the fact that OPEC did it first, and major powers may be unlikely to allow that to be repeated.
- foota 9y agoOPEC may exist as an organization but its members generally don't abide by quotas.