Oligopolies Flashcards
(4 cards)
1
Q
What is an oligopoly?
A
Market dominated by a few large firms.
2
Q
What are the features of an Oligopoly?
A
-Few firms dominate market
-Barriers to entry
-Non-price competition (product differentiation)- to avoid price wars. Brand loyalty- loyalty cards, promotion, branding
-Interdependence- actions of one have a direct impact on others. Eg price war
-Collusion- informal agreements between firms to restrict competition. Agree to price fixing, charging higher prices. Agree to reducing output, price increases.
3
Q
What are the advantages of Oligopoly?
A
Choice
Quality
Economies of scale
Innovation
Price war
Collusion
4
Q
What are the disadvantages of Oligopoly?
A
