Oligopoly - Oligopoly Revisited 2 types of oligopoly:...

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Oligopoly Revisited Oligopoly Revisited
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General info. 2 types of oligopoly: Homogeneous-(steel, zinc, aluminum, cement industries) Differentiated-(tires, electronics, automobiles, sporting goods, breakfast cereals) Price makers, but mutual interdependence Entry barriers exist b/c economies of scale are difficult to achieve (small mkt. share), large capital expenditure and ownership & control of raw materials.
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Mergers Oligopolists find themselves with an “urge to merge”. Greater market power/share, greater economies of scale, and ability to control input prices are underlying reasons.
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Industry Concentration Concentration ratios reveal the % of total output produced by the industry’s largest firms. When the four largest firms in an industry control 40% or more of the market, that industry is considered oligopolistic. (Table 23.2-p. 452) Concentration ratios have 3 shortcomings: Localized markets-some producers are highly localized due to high transportation costs (ready-mix concrete)
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Oligopoly - Oligopoly Revisited 2 types of oligopoly:...

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