ABSTRACT
This chapter examines different views of the importance of the cartel. It discusses how the cartel operated in the relatively uncompetitive environment which obtained until the late 1970s and in the more competitive environment which followed. The chapter describes the structure of the industry within which the cartel has operated. Relevant models of oligopoly are examined to determine the conditions necessary for an agreement to be either desirable or effective, given the existing industrial structure. It describes the extent to which these conditions apply to the housing finance market and in particular to the building society cartel. To determine the relative merits of these two strongly opposing views of the cartel it is necessary to examine both how the agreement actually operates and what would be the likely behaviour of societies without such a formal agreement. The building society cartel is unusual because it has held prices down rather than increasing them.
