Market Sharing Cartels:

This form of collusion is more popular. Here the firms agree to share the market but at the same time maintain a considerable degree of freedom regarding product differentiation, selling activities and other business decisions. There are two basic methods  of sharing the market:(1) Non-price competition and (2) Quota system 

1) Non-price competition  

In this form of a 'loose' cartel, the member firms agree on a common price, at which each of them can sell any quantity demanded. The price is set by the process of bargaining, with the low-cost firms pressing for a lower price and the high-cost ones for a higher price. The agreed price must be such as to allow some profits to all the members. The firms agree not to sell at a price below that decided by the cartel, but they are free to vary the style of their product and/or their selling activities. In other words, firms compete on a non-price basis.  

2) Quota system

It is an agreement on the quantity that each member may sell at the agreed price(s), if the costs are identical, then the firms share the market equally among themselves. If costs differ, then the share of the market is decided by bargaining. The final quota of each firm depends on the level of it's cost as well as on it's bargaining skill. Most often adopted criteria for determining quotas are 'past-period sales' and 'productive capacity'. Another popular method of determining quota is that of geographical sharing of the market.