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8 Cards in this Set
- Front
- Back
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Define Oligopoly. Describe the Oligopoly market structure in terms of the number of producers, barriers to entry, and the type of product.
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In in oligopoly there are only 2-6 firms that have market power, the barriers to entry are high and the product is standardized or differentiated.
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What are the monopolistic aspects of an Oligopoly? What are the competitive aspects of an oligopoly?
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In an oligopoly the firms all have a substantial piece of market power. An are competitive because they all have a very similar product if not identical.
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Explain the role of strategic interdependence.
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Strategic interdependence in an Oligopoly is a firm choosing the correct times to price match and/or price cut a competitor.
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Explain the concentration Ratio. What is the typical concentration ratio for an oligopoly?
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Concentration ratio tells the share of output by the largest firms in the industry. In an oligopoly the ratio is normally 60%.
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How does an oligopolist increase sales without changing prices? How does that strategy affect market shares of rivals?
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In an oligopoly marketing, advertising, and product differentiation a ways to increase sales w/o changing prices, thus increasing market power to one firm.
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How does an oligopolist increase sales by changing prices? How does that strategy affect the market shares of rivals?
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By price cutting rivals sales over the short-run can be increase and therefore increasing market power to a firm, in the long-run this can lead to price wars ultimately benefiting the consumer.
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What is a pure oligopoly?
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A pure oligopoly is when few producers dominate the production of on item.
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What is a differentiated Oligopoly?
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Similar products produced by a few manufacturers within an industry.
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