The Coming Breakdown of the Academic Cartel by Gary North Higher education in the United States is a cartel. It is rarely discussed in these terms, but that is what it has been throughout most of the 20th century. A cartel is an association of producers that jointly establishes certain output criteria for membership. The goal of the cartel is for all of its members to obtain net revenues above what would be possible if there were open competition, especially price competition.
Members restrict output in order to gain high revenues per unit sold.
The cartel's members raise their prices. A cartel faces competition from members who cheat and from non-members who enter the market. This is why cartels that do not obtain protection from the State in restricting entry into a market eventually break down. Without State intervention, newcomers attract consumers by offering lower prices. Also, some cartel members cheat by secretly increasing their output, lowering prices, or both.