What Is Collusive Oligopoly?

A collusive oligopoly is an economic structure consisting of only a few producers, who typically form secret cooperative policies that aim to dominate a certain market, influence product-pricing and dictate market shares among competing corporations. The Organization of Petroleum Exporting Countries, commonly known as OPEC, is an example of a collusive oligopoly, where the production and pricing of oil is controlled by its member nations.

Collusion is a business strategy that reduces direct competition among industrial oligopolies. It is usually a covert venture because some countries, such as the United States, prohibit the formation of collusive oligopolies or "cartels" by virtue of its antitrust laws. A collusive oligopoly differs from a monopoly, which is controlled by a single business entity.