How to Calculate a Cartel Industry Output and Market Share

The OPEC cartel controls output so that oil prices remain high.

Cartels are groups of companies in the same manufacturing industry that work together to control market share and price. The companies cooperate to keep prices constant and may work to keep competitors out of the market. Cartels reduce the competition among individual companies so that prices remain high and everyone gets a market share. OPEC is a good example of a cartel. The oil producing nations control output and help to drive the prices up. During times of high demand, they increase output and, when demand drops, they decrease output to drive the price of oil up.

Things You'll Need

• Calculator

Instructions

1. Obtain information on the amount of industry sales per year. Of course the sources for this data depend largely on the industry in question, but the census bureau is a good place to start.

2. Calculate the market share of each company in the cartel using the following formula:
   (Total Company Sales / Total Industry Sales) * 100

   The percentage you get is the market share of the individual companies. Add all the market shares to determine the total market share of the cartel.

3. Use the same formula and methodology to calculate industrial output. Output estimates are available on a monthly basis. Each company in the cartel must reveal their output for the time period in question. These outputs are added and the formula is applied to get the cartel's percentage output of the whole country.

References

• Indian Institute of Technology Kanpur: Detecting Cartels in the Indian Cement Industry
• DIY Marketers: Two Ways to Calculate Market Share You May Not Have Considered

Resources

• Investapedia:Economic Indicators: Industrial Production
• US Census Bureau: Home Page