Why are cartels inherently unstable?

1. In a game theory scenario, the firms often has an incentive to deviate. Hence, most cartels are not in a nash equilibirum! It is a prisoners dilemma, where if both act in their own self interest both lose. 2. Leniency reductions in fines from financial authorities. If one member of the cartel whistleblows, they get no fine. Hence, it is incentivised to inform authorities of the cartel. 3. Free rider problem. Free riders earn more than what cartel members do.