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7 Cards in this Set

  • Front
  • Back
What is an Oligopoly?
It is an industry that consists of few firms (less than 5) that compete within themselves and act like a monopoly.
What is the concentration ratio?
Combination of all market shares
What is a Perfect Oligopoly?
Industry that produces similar goods (e.g. oil, gas)
What is an Imperfect Oligopoly?
Industry that produces similar goods but they are not identical.
What are Sticky or Rigid Prices?
They are opposite of flexible prices; maintained cost of production.
What is the Cost Cushion?
It allows them to maintain a rigid price.
What are the 8 characteristics of Oligopoly?
1. Very few firms but several buyers
2. Strong barriers into the industry (e.g. patent, technical know-how)
3. Higher concentration ratios (e.g. 70-90% of market)
4. Substantial economy of sale (reduction in cost of production)
5. Mutural dependence as far as pricing is concerned
6. Maintain rigid prices (avoid price competition)
7. Growth through merger
8. Non-price competition, but engage in advertising in customer service.