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Unformatted text preview: From Notes in Class Oligopolistic Firms 1) Mutual Interdependencies a) Price leadership- one firm takes title as the price leader. If it changes its price another firm follows (Usually the biggest firm sets price). b) Collusion- when the firms act as a single unit rather than individuals (Firms come together and discuss prices) when firms seize to act independently, they become collusive, lose competition and act as a monopoly. c) Cartel (Collusion)- providers of some products figure out one price. i. EX) OPEC- Cartel of Countries EX) DeBeer- Diamond Cartel *Collusion is illegal in America 2) Relative Price Stability Kinked Demand Curve 3) Barriers to Entry a) Mergers i. Horizontal- 2 companies producing some product combine to make one big company. ii. Vertical- merges different production methods together EX) merging raw materials with transportation and manufacturer...
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This note was uploaded on 03/19/2008 for the course ECON 004 taught by Professor Graf,pauledwin during the Spring '07 term at Pennsylvania State University, University Park.
- Spring '07