One thinks of economics in terms of equilibrium. If a price is too high,-sales drop; too low, shortages. But when there is a substantial gap between average costs and marginal costs, the property of equilibrium breaks down. This is clear when there is bidding for a large project. If you don’t win the bid, you have the costs of carrying idle equipment and some payroll costs. Thus bidding tends to insufficient prices. It is that property that leads to collusion. The garbage trade has low marginal costs for an additional stop on a route, but the average cost has to cover the costs of trucks, garages, landfill development, etc. and we get organized crime in the garbage collection industry. At least that used to be true.

There is a pseudo equilibrium in firms failing, leading to monopoly, and monopoly is the ultimate collusion.