How is the price determined under "joint profit maximization cartel"? Explain.

A joint profit maximization cartel is a formal agreement among oligopolists to hand pricing and output decisions to a central agency that behaves like a monopolist for the whole group, so as to maximise the industry's combined profit.

1. Meaning: member firms give up independent pricing and act together through a central board that sets policy for all of them.
2. Aim: to maximise the joint (industry-wide) profit, exactly as a single monopolist would, rather than each firm's separate profit.
3. Central agency's role: the agency decides the total industry output, the common price, the share of output for each member, and how the joint profit is divided.
4. Industry MR: the central agency treats the members' combined demand as the market demand and derives the corresponding industry marginal revenue curve.
5. Industry MC: the industry marginal cost curve is obtained as the horizontal summation of the individual members' MC curves.
6. Profit-maximising output: total cartel output is fixed where industry MC = industry MR, with MC cutting MR from below — the monopoly rule applied to the whole group.
7. Price determination: the common price is then read off the industry demand (AR) curve above that total output, and every member sells at this price.
8. Allocation of output: the agency allocates output so that each firm's marginal cost equals the common industry MR — low-cost firms are assigned more output and high-cost firms less, which minimises total cost.
9. Sharing the profit: the resulting joint profit is distributed among members according to the cartel agreement, not necessarily in proportion to output.
10. Nature and limitation: the arrangement mimics monopoly and is illegal in most countries, and it tends to be unstable because members are tempted to cheat by secretly selling more.

Thus, a joint profit maximization cartel sets total output where combined MC equals combined MR and charges the monopoly price off the demand curve, allocating that output to members by equating each firm's MC to the industry MR.