are discussed these days in the eventual disappearance of the management system of supply of agricultural products in Canada. A few weeks ago, newspapers reported that the Competition Bureau had uncovered a conspiracy against the public, while 13 individuals and 11 companies have been accused of having formed a cartel in the gasoline market in Sherbrooke, Magog, Victoriaville and Thetford Mines. What connection is there between these two events? To answer this question it is helpful to understand what a cartel.
A cartel is a group of producers who agree to keep prices high, by reducing competition. This can enable them to increase their profits by emulating the behavior of a monopoly. Note that a monopoly and a cartel (which works) is the same. Both lead to reduced production and higher prices.
Obviously, we could see the audience moved to such behavior in retail gasoline and demand more vigilance by the government, as well as copies of penalties for offenders. At right, because competition is essential for the proper functioning of the market.
There are actually two ways for producers get less competition and more profits. First, they can try to form a cartel. But it's complicated, because the cartels are unstable and ... illegal. Indeed, once the cartel formed in everyone's interest to cheat, taking advantage of reduced competition from others to increase his own. This is the reason why the offending companies in the field of gas are where the number of competitors is low: it is easier to agree to five, in the regions, only a mile Montreal. And there's always the danger of getting caught by hand in the bag.
Second, firms may form an association funded by its members, who will be lobbying to get legislation that will force everyone to reduce competition. Hence the laws of supply management in agriculture. The supply management is very simple: to produce a good milk, for example, must be licensed. This limits the number of permits, which reduced production and keeps prices high. Because the government imposes itself the quota system, by coercion, everything is settled.
It is particularly amusing to see that oil companies accused of forming a cartel would simply have come together to ask the government a minimum price of gasoline. They have obtained legally, they have tried for concealment. Ah, but I forgot! The minimum price for gasoline already exists in Quebec ...
Bizarre anyway, myopia that we demonstrate to the government. Governments are in fact the largest source of monopolies and cartels in the economy.
Let's go with the most egregious of creating and maintaining cartels (and arrangements that achieve the same result) by governments: the producers' cartel milk, the maple syrup, eggs, poultry (production limiting the emission quotas), the cartel of taxi (limiting the number of permits), maps of "competence" in the trades construction and other union cartels, etc. .. And all areas protected by protectionist trade policies. Finally, do not forget the monopolies created by law: alcohol, electricity, games.
Surprise: Government, by its laws and regulations, is responsible for the creation and maintenance of the largest cartels in the economy. And a significant loss of welfare pour les consommateurs. Nous devrions donc nous réjouir, et non pas nous inquiéter, devant la possibilité de disparition des cartels agricoles.
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