Oligopoly essay

Question 1

Introduction

Answer 1

Characteristics of an oligopolistic market

Interdependence, differentiated goods, entry barriers, differentiated goods, price rigidity, price setting power

Question 2

Definition of oligopoly

Answer 2

Market dominated by a few (rule of thumb is top 5 firms account for more than 60% of market share. Actually best defined by the real conduct of the firms.

Question 3

Define price strategies

Answer 3

There are different pricing strategies such as profit maximising, sales maximising or profit satisfaction. They all have different market outcomes.

Question 4

KAA1

Answer 4

Price setting power 
Interdependence of firms 
Price rigidity
(Kinked demand curve)
Incentive to collude (overt or tacit)