| CARTEL | TRUST |
| It can be formed easily | The formation of the trust is a complicated matter |
| Cartel is a horizontal type of combination | Its type is vertical. |
| In the cartel, member firms possess separate entity and are free in their internal affairs | In the trust, central body is considered policy maker and the member firms are bound to execute the policy. Generally the members are not free in internal affairs |
| As distribution activities are performed collectively by its members, it can secure economies of distribution | As member companies are controlled over under one management, it can enjoy economies of administration, production and distribution |
| No, certificate is issued to the members of the cartel | Board of Trustees issue trust certificate to the member companies in exchange for their stocks of shares |
| It has not the capacity of permanent existence. It eliminates the competition but it is regarded uneconomic type of combination | It is considered against the public interest and from the economic point of view, it is advantageous. It enjoys large profit |
| It is not possible to adjust supply to change in demand due to the lack of control over production | Central body controls the production of the member companies. Therefore, it is, convenient to adjust supply in response to change in the demand |
| Its control is decentralized | It is controlled by the Board of Trustee, bence its control is centralized |
| It is a loose form of combination. A member can come out of the organization at the time | It is a strong form of combination an members cannot easily come out of the trust |
| There is limited capital for its operation due to the disability of transferring of securities of the member companies | The capital volume may be increased for the working of the business by transfer of securities of member companies |
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
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