In markets characterised by oligopoly,

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In an oligopoly, the firms have significant market power and can influence the price in the market. However, if the firms collude and act like a monopoly by restricting output and raising prices, they can earn higher profits. This is because the higher prices offset the lower output, resulting in a larger profit margin per unit sold. However, this is only true if the firms can coordinate and maintain the collusive agreement, which is difficult due to the incentive to cheat on the agreement and increase output to capture more market share.

In Markets Characterised by Oligopoly