Oligopoly comes from the Greek word meaning few sellers.
Big business is an example of oligopoly. It is a market dominated by few sellers. These are
industries like steel, automobiles, oil, and breakfast cereals.
Because there are few firms, each firm must consider how their policies are going to effect
their competitor's behavior.
In some oligopolist industries there is a homogeneous product. Ex. Steel, Oil, etc.
In others, the product is differentiated across producers.
showed first 75 words of 1167 total
showed last 75 words of 1167 total
Summary of Oligopoly Models
Cartel = collusion, hard to establish and maintain
Price leadership = firms act in unison on prices but do not form a formal cartel.
Cost-Plus = simple pricing strategy, use costs and then add a percentage to cover
Game Theory = price wars, interdependence, moves and countermoves
Kinked Demand = firm pushes price down, all firms follow; firm raises price, other firms
stay put and hope to catch consumers that come from other firm.