What are the socio-economic effects of cartels?

• The speed of innovation in the industry may decrease as firms collaborate on price, market sharing and not competing with each other through innovations • A recent good example of this is ’Dieselgate’ in Germany involving all big German car producers. Instead of investing in new (risky) technology they formed cartel and invested in (safe) ’old’ Diesel technology - and in software that deceived emission tests • Firms’ productivity can go down, the ’quiet and comfortable life’ of the administration - and maybe in the production halls • Lower innovation and enjoying ’business as usual’ imply higher costs (ATC and MC move upwards), even higher prices, losses in both consumer and producer surplus