2. 1 COLLUSIVE OLIGOPOLY Collusive oligopoly occurs where firms agree either formally or informally, to limit the competition between them. They may agree on prices, market share, advertising expenditure etc Such collusion will reduce the uncertainty the firms face in a fiercely competitive environment. It will reduce the fear of engaging in competitive price cutting or other strategies, which could reduce total industry profit2. 1 COLLUSIVE OLIGOPOLY Collusive oligopoly occurs where firms agree, either formally or informally, to limit the competition between them. They may agree on prices, market share, advertising expenditure etc. Such collusion will reduce the uncertainty the firms face in a fiercely competitive environment. It will reduce the fear of engaging in competitive price￾cutting or other strategies, which could reduce total industry profit