Even when allowed to collude, firms in an oligopoly may choose to cheat on their agreements with the rest of the cartel. Why?

Oligopoly

A market structure in which a few firms dominate, often resulting in reduced competition.

Collude

When firms work together, often in secret, to fix prices, limit production, or divide markets, in order to increase profits by reducing competition.

Cartel

An alliance of producers who agree to control prices, production, and marketing of their products to maximize collective profits.