Oligopoly

Oligopoly - IB Economics Drogaris Theory of the Firm Market...

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IB Economics – Drogaris Theory of the Firm – Market Structures Gaith Kalai Oligopoly Page 144; 2+3, 146;1 2. Generally speaking, it is safe to say that the name of the game of Economics boils down to profit maximization. In the field of oligopoly, firms make decisions according to output and price, whereas a large portion of their decisions relies on non-price competition such as technological innovations, marketing, advertising and reputation. As firms try to differentiate themselves from their competitors and icrease their profits, the presence of losses will incentivize some firms to shut down and therefore giving the remaining firms a larger consumer tank and less competition. When it comes to conflicting interests however, as each firm’s ultimate goal is to profit maximize (whether by increasing its Marginal Revenue to increase in size as whole increase its Marginal Profit to increase its direct profits), expending large sums of money on fields of advertising, brand name, ect. . hinder firms from reaching their ultimate goal, which as previously
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Oligopoly - IB Economics Drogaris Theory of the Firm Market...

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