Oligopoly Flashcards

1
Q

Characteristics

A
  • Few large sellers
  • Differentiated products
  • High barriers to Entry-
  • Interdependence
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2
Q

Collusion

A

Agreement between firms to limit competition and avoid price wars

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3
Q

Overt collusion

A

A formal agreement to collude can be in the form of a contract
- example - BA and virgin

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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
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5
Q

Price wars

A

Repeatedly reducing the prices below that of their competitors to offer the lowest price in the market

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6
Q

Why might firms collude

A

Because they want to avoid price wars as it can reduce their total profit

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7
Q

Price leadership

A
  • refers to when the price leader changes prices other firms will follow
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8
Q

Cartel

A

Many firms collude in the market

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9
Q
A
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