Abstract
Among the proposals for retaliating against OPEC prices and production cuts is a grain cartel that will match a bushel of wheat for a barrel of oil. The concept is not valid, however, because the grain market does not have the particular economic conditions which allow OPEC to succeed. Cartels are able to charge higher prices than a competitive industry, but the profit-maximizing rate of output will be less. A US grain cartel would be ineffective because a rise in prices would only result in increased world production by non-cartel members. A food cartel would also harm less-developed countries and would increase famine. 19 references, 5 tables. (DCK)
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