Producer cartels are about monopolistic coordination aimed at raising the suppliers' revenues. Efforts to cartelize typically come in waves, and have occurred throughout the history of international commodity trade. This chapter focuses on the 1970s, when the most recent wave occurred. While it lasted, a number of academic efforts were launched to explain the functioning of commodity cartels in general and of OPEC in particular. Despite the theoretical developments and the many modeling exercises that were undertaken, many of the key issues concerning commodity cartelization remain to be fully understood. The remark from an influential survey of commodity cartelization from the mid-1980s (Gately, 1984), that “There are a large number of alternative theories, but a much smaller number of sensible applied models,” retains its validity even twenty years after it was published.

The present chapter begins by studying the necessary minimum preconditions in terms of elasticities and market shares, for successful cartel action. I then identify the markets where these preconditions appear to be fulfilled. There follows a brief account of the attempts of commodity producers to wield the market power to their own benefit, trying to answer questions such as: What were the triggers to the cartel action? How did it go? How did the buyers react? What prompted cartel disintegration? There is a heavy emphasis on the oil cartel, and an effort to explain why OPEC has persevered while the other cartel efforts failed.