Why are oligopolies inherently an unstable market structure?

Oligopolies are inherently unstable because they consist of a small number of firms that are highly interdependent; each firm's decisions regarding pricing and output directly affect the others. This interdependence can lead to competitive behavior, such as price wars or collusion, as firms attempt to gain a larger market share. Additionally, the potential for new entrants to disrupt the market or changes in consumer preferences can further destabilize the equilibrium. As a result, the balance of power and profitability within an oligopoly can shift rapidly.