Cartel theory

For the pre-modern cartels, which existed as rules for tournaments, duels and court games or in the form of inter-state fairness agreements,[1] there was no scientific theory.

The word "cartel" has its root in the Greek χάρτης (= papyrus scroll, paper, map) and came about the Latin "charta" (see Magna Carta, the English medieval law), the Italian "cartello" (diminutive of carta = paper, map) and the French "cartel" into the English and German language.

At the beginning of the 20th century, the socialist thinker Karl Kautsky saw the possibility of even a cartel between states that would replace the imperialist competition of the great powers and establish a peaceful ultra-imperialism.

So there is:[3]: 51–65 In addition, "cartel" or "Kartel" are used as names for distinct brands, business companies, music bands or works of art.

Already in the 1870, 'Cartell' came up for railway companies who unified their technical standards, pooled their stocks of railroad cars and coordinated their time schedules.

However, they operated with different basic terms such as (in French) "syndicat", "accaparement", (in Italian) "sindacati", (in English) "combination" or "trust".

In France Francis Laur and Paul de Rousiers, in Italy Francesco Vito, in the USA Jeremiah Jenks and in the United Kingdom Henry W. Macrosty as well as David H. MacGregor were authoritative writers on economic combinations.

Modern cartel theory points out - much more committed than the classical one - to the detrimental consequences of a lack of competition that leads to overpricing, misallocation of capital and slowing down of technical progress in the economy.

Thus, these two directions of cartel studies feature conflicting, mutually exclusive economic concepts and neither of them can ideally solve the fundamental problem of entrepreneurial competition.

[9] Abstracted from the concrete circumstances of the individual types of competition, an overarching theory of the social system 'cartel' emerges.

These are perceived as disturbing or threatening and lead to collusion on fairness rules and reconciliation of interests, e.g. by joint ventures.

The driving force that leads to cartel formation and successively condenses the associations on a development path to higher organizational forms is rationalization.