Oligopoly Flashcards
1
Q
Characteristics
A
- Few large sellers
- Differentiated products
- High barriers to Entry-
- Interdependence
2
Q
Collusion
A
Agreement between firms to limit competition and avoid price wars
3
Q
Overt collusion
A
A formal agreement to collude can be in the form of a contract
- example - BA and virgin
4
Q
Tacit collusion
A
- An unspoken agreement between firms to collude
- for example a business may decrease their price and competing firms may also decrease their price to maintain customers
5
Q
Price wars
A
Repeatedly reducing the prices below that of their competitors to offer the lowest price in the market
6
Q
Why might firms collude
A
Because they want to avoid price wars as it can reduce their total profit
7
Q
Price leadership
A
- refers to when the price leader changes prices other firms will follow
8
Q
Cartel
A
Many firms collude in the market
9
Q
A
