Oligopoly Flashcards
(5 cards)
How much influence does a firm in an oligopoly have on price?
It has LESS control over pricing than it would do in a monopoly however it has MORE than perfect competition
How is the market structured?
There will be a few large firms dominating the market but there will also be a few smaller firms
How would one firm react to another’s price cut?
It would cut its price too.
One firms decision depends on anothers. If one firm drops it price, so will another.
Firms are aware that their actions are likely to cause counter-action by their competitors
What is a non-collusive oligopoly?
A situation where firm act completely independently of each other
What is a collusive oligopoly?
A situation where firms work together, either illegally in cartels or legally in legal agreements.
For example, British Airways, American Airlines and Iberia on Transatlantic routes.
