What defines a cartel in business?

A cartel in business is defined by agreements among competing firms to limit competition within a specific market. This typically involves practices such as price-fixing, market division, or establishing production limits—actions that undermine free competition to control market conditions and maximize profits for the participants.

By agreeing to limit competition, cartel members can manipulate prices or market shares, which benefits the involved companies at the expense of consumers and the overall market. This practice is illegal in many jurisdictions because it harms economic welfare and violates antitrust laws aimed at maintaining free competition.

The other options misinterpret the nature of a cartel. Agreements to compete aggressively or share market research can involve healthy competition and innovation, while contracts to collaborate on production methods could be seen as forming a structure for operational effectiveness without necessarily restricting competition. Only the option that highlights limiting competition encapsulates the essence of what a cartel is.