Final answer:
Oligopolists can illegally increase profits through price collusion, which is an agreement to restrict output and keep prices high, often forming cartels like OPEC, although domestic collusion faces legal penalties.
Step-by-step explanation:
The way that oligopolists can coordinate to increase individual profits, which is illegal in most countries, is Option 1: Price collusion. Collusion involves an agreement among firms in an oligopoly to restrict output and keep prices high, essentially reducing competition and acting as a monopoly. This can manifest as a formal arrangement known as a cartel. While it can lead to higher profits for the firms involved, it is illegal because it undermines the free market competition and is harmful to consumers and the overall economy. Examples of such behavior can be found in international organizations like OPEC, which, due to international legal complexities, often escape legal enforcement, unlike domestic firms which can face severe penalties for collusion.