Which of the following factors hinder the formation and sustainability of Cartels?
A. Less number of firms in the industry.
B. Presence of differentiated products.
C. Different cost structures.
D. Low frequency sales coupled with huge amounts of output.
E. Absence of monopolies and restrictive trade practices.
Choose the most appropriate answer from the options given below:

Correct option is A

The factors that hinder the formation and sustainability of cartels:
b. Presence of differentiated products: When products in the industry are differentiated, it becomes challenging for firms to coordinate prices and output levels. Differentiated products often have unique characteristics, branding, and customer preferences, which leads to increased competition among firms. This competition makes it difficult for firms to reach an agreement and maintain a cartel.
c. Different cost structures: If firms in an industry have different cost structures, it becomes harder to agree on pricing strategies that benefit all members equally. Each firm's cost structure influences its willingness to cooperate and adhere to cartel agreements. Differences in costs can lead to conflicts of interest and undermine the sustainability of cartels.
d. Low frequency sales coupled with huge amounts of output: When sales occur infrequently, it becomes more difficult for firms to coordinate and monitor their pricing behavior. Additionally, if the industry produces a significant volume of output, it can create challenges in maintaining the agreed-upon output levels. These factors make it harder to sustain a cartel because it requires continuous coordination and monitoring.
Other factors that hinder the formation and sustainability of cartel.
 Legal and regulatory barriers
 Presence of strong competition:
 Lack of trust among cartel members
 Different objectives and interests
 Monitoring and enforcement challenges
 External market forces