write the two different ways in which an oligopoly firm may behave.
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Following are the three different ways in which oligopoly firms may behave:
(i) Firms may collude together and decide not to compete with each other and maximise total profits, as in collusive oligopoly.
(ii) Under non-collusive oligopoly, firms decide not to collude and hence decide to compete with each other through non-price competition.
(iii) Firms may produce differentiated products, having their own distinguishing characteristics, as in imperfect oligopoly.
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The ways in which an oligopoly firm may behave are based on market demands.
Explanation:
- The oligopoly is a market structure where the firms are small and keep others from creating any significant influence.
- They tend to also measure the large market share of other firms. They tend to reduce the market competition which leads to higher prices for the consumers.
These forms tend to behave in a certain manner :
- The cartel that is in order to avoid undue corruption these firms may first emerge and involve informal agreements that allow them to maximize their profit but capture significant market share.
- Informal understanding of each form may decide on its own and set the units of production to maximize the profit outlook. Assuming that other firms would not change their decision and strategies.
- Advertisement and differentiated production in which firm realize price competition and emphasis on advertising.
Learn more about the two different ways in which an oligopoly firm may behave.
- brainly.in/question/15636796 answered by mdatifnasim70mp64jpe.
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