Paul_Sweezy_Oligopoly

Paul_Sweezy_Oligopoly - Oligopoly Paul M Sweezy suggested...

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Oligopoly Paul M Sweezy suggested ‘It is pretty well agreed among economists that the ordinary concept of a demand curve is inapplicable to oligopoly.’ In particular Sweezy said, the assumption, that everything else would remain unchanged if the oligopolist changed his price, was unrealistic. Oligopoly is therefore more complicated than our other models of monopoly or perfect competition and there are indeed several methods used to model oligopoly. Textbooks give slightly differing definitions of oligopoly; ‘a market situation where there are a few firms’, or ‘a market with many firms but where a few dominate’, being two of them. My preference is for, a market situation where a few firms dominate , as this encompasses the first and second definitions. Sweezy’s comment above implies that firms in oligopoly are interdependent. That is, if one firm changes their price, output, advertising etc., there will be some effect on the demand of other firms in the market. So we might add this to our definition; a market situation where a few firms dominate and where firms are interdependent. The two main approaches to understanding oligopoly are ‘Game Theory’ and ‘The Kinked Demand Curve’ . Matters are then further complicated by the existence of different types of oligopoly. The Kinked (Kinky) Demand Curve
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Paul_Sweezy_Oligopoly - Oligopoly Paul M Sweezy suggested...

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