What is the lole of nem sta palice strategies
like advertisements in digopoly? Why
are they important?
Answers
Answer:
An oligopoly is a market with a high level of market concentration with the leading firms dominating market share. Often in an oligopoly, there may be lengthy periods of "price stickiness" which happens when firms are setting similar prices and may have little incentive to change them even when there is a change in the costs of supply.
Answer:
Collusion and Competition
Firms in an oligopoly can increase their profits through collusion, but collusive arrangements are inherently unstable.
LEARNING OBJECTIVES
Assess the considerations involved in the oligopolist’s decision about whether to compete or cooperate
KEY TAKEAWAYS
Key Points
Firms in an oligopoly may collude to set a price or output level for a market in order to maximize industry profits. At an extreme, the colluding firms can act as a monopoly.
Oligopolists pursuing their individual self-interest would produce a greater quantity than a monopolist, and charge a lower price.
Collusive arrangements are generally illegal. Moreover, it is difficult for firms to coordinate actions, and there is a threat that firms may defect and undermine the others in the arrangement.
Price leadership, which occurs when a dominant competitor sets the industry price and others follow suit, is an informal type of collusion which is generally legal.