2. Cartel Occurrence and Operation in Market

Profit seeking actions of undertakings often depend on the structure of the market in which they operate. Although economic theories usually distinguish among four types of market structures—perfect competition, monopoly, oligopoly and monopolistic competition, two of them appear to be more common in practice, i.e. oligopoly and monopolistic competition. By its characteristics, monopolistic competition is closer to the perfect competition model, while oligopoly is more similar to monopoly. In oligopolistic markets, firms very frequently start operating in an interdependent manner in order to maximise their profits and thus form cartels. It is namely the oligopolistic market in which several firms, even occupying small market shares, are in a position of controlling a large market share, i.e. joint collective actions enable maximising the generated profits. In addition, in markets with a small number of players, the market players are well aware that pricing or output decisions taken independently by every firm have a direct influence on the profits of all competitors. Therefore, both theoretical and empirical studies have proved that cartels are most commonly seen in the oligopolistic markets. For that reason, analyses of collective corporate actions and modelling of effects thereof have been extensively integrated into and supplemented the theory of oligopolistic markets.