ECON112-4-08-Oligopolies - ECON112,4/-/08 OLIGOPOLIES...

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Sheet1 Page 1 ECON112,4/--/08 OLIGOPOLIES product differentiation- products in real life are diffent, or at least perceived to be so entry barriers- obstacles that prevent firms from entering markets e.g. opening a pizza parlor has less of an impact done by entry barriers than, say, starting your own Coca-Cola economies of scale- cost advantages that a firm obtains due to expansion e.g. Coca-Cola having huge plants leads to them having lower production costs diseconomies of scale- similar to economies of scale, but expansion leads to higher costs e.g. Coca-Cola is too big, so workers have trouble communicating, there are too many higher-level managers, etc. economies of scale lead to expansion, diseconomies of scale lead to breaking down of firm mergers- companies combine, leading to large firms ADVANTAGES OF LARGE FIRMS advertising: big firms have easy advertising access non-recoverable costs are costs associated with advertising, as you cannot get advertising money back as you can by selling your store or machinery
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This note was uploaded on 04/12/2008 for the course ECON 112 taught by Professor Minkler during the Spring '08 term at UConn.

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ECON112-4-08-Oligopolies - ECON112,4/-/08 OLIGOPOLIES...

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