Final answer:
When competitors in an oligopoly collaborate to influence prices, it is called collusion, and when they form a formal agreement to do so, it's known as a cartel.
Step-by-step explanation:
When competitors in an oligopoly market get together to raise, lower, or stabilize prices, this behavior is called collusion. Collusion occurs when oligopolistic firms work together to control the market, hold down industry output, and establish higher prices, much like a monopoly would.
This enables the participating firms to share the monopoly level of profits without having to compete with each other on price. A formal agreement between firms to collude is known as a cartel. The practice of collusion, although it can lead to increased profits for the firms, is often illegal and against the interest of consumers.
The act of competitors getting together to raise, lower, or stabilize prices is called collusion. When oligopoly firms in a certain market decide to reduce output and keep prices high by acting together, it is a form of collusion. A group of firms that formally agree to collude is known as a cartel.