State the differences between collusive and non-collusive oligopoly

State the differences between collusive and non-collusive oligopoly.

Collusive oligopoly is a form of market in which few firms form a mutual agreement to avoid competition. They form a cartel and fix the output quotas and the market price. The leading firm in the market is accepted by the cartel as a price leader. All the firms in the cartel accept the price as fixed by the price leader.

Non-collusive oligopoly is a form of market in which there are a few firms in the market. Each firm has its price and output policy independent of the rival firms in the market. All the firms are able to increase their market share through competition in the market.