Oligopoly power_point[1] - Chapter:11 OLI GOPOLY D’Silva...

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Unformatted text preview: Chapter :11 OLI GOPOLY D’Silva Econ:102 Learning objectives Describe the characteristics of an oligopolistic industry. Differentiate between standerdized and differentiate oligopolies. Identify and explain the most important causes of oligopoly. Use the kinked demand curve theory to explain why prices tend to be inflexible Learning objectives Identify three possible models of oligopolistic price-output behavior Explain the major advantages of collusion for oligopolistic producers List the obstacles to collusion behavior Explain price leadership as a form of tacit collusion Oligopoly Common & impor tant mar ket str uctur e a few lar ge fir ms pr oducing a • standar dized • differ entiated pr oduct dominate a mar ket Char acter istics Small number of lar ge fir ms • Dominate the industr y • Set the pr ices • Account for major per centage of total industr y output I nter dependent • M utually inter dependent • Any action on the par t of one fir m with r espect to output, pr ice, quality or pr oduct differ entiation • cause a r eaction on the par t of other fir ms. Few fir ms in the industr y • mutually inter dependent— • each must consider its r ivals’ r eactions • in r esponse to its decisions about pr ices, output, and adver tising Standar dized & Differ entiated oligopolistic industr ies • pr oduce standar dized pr oducts E.g. steel, zinc, copper , cement • other s pr oduce differ entiated pr oducts E.g. automobiles, deter gents, gr eeting car ds. Why oligopolies occur ?...
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Oligopoly power_point[1] - Chapter:11 OLI GOPOLY D’Silva...

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