Trade Associations

Capitalism is built on the assumption that sellers compete with each other to engage in transactions with buyers. The history of sellers cooperating with each other is often overlooked even though it is important for the stability of the market. Economist Adam Smith was wary of this behavior because of the tendency toward collusion to fix prices. However, this cooperation has evolved in the modern market through the organization of trade associations that engage in a variety of activities, excluding price-fixing, aimed at the development and protection of individual industries as well as the capitalism system. These associations utilize resources from members to address problems collectively.

Trade associations are voluntary organizations created by a group of individual businesses or business owners to promote, enhance, and protect ...