Definition of oligopoly An oligopoly is an industry dominated by a few large firms. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. Examples of oligopolies Car industry – economies of scale have caused mergers so big multinationals dominate the market. The biggest car firms include Toyota, …
There are different diagrams that you can use to explain 0ligopoly markets. It is important to bear in mind, there are different possible ways that firms in Oligopoly can behave. 1. Kinked Demand Curve Diagram In the kinked demand curve model, the firm maximises profits at Q1, P1 where MR=MC. Thus a change in MC, …
Oligopoly is a market structure in which a few firms dominate the industry; it is an industry with a five firm concentration ratio of greater than 50%. In Oligopoly, firms are interdependent; this means their decisions (price and output) depend upon how the other firms behave: Barriers to entry are likely to be a feature …
Readers Question: To what extent does the kinked demand curve model explain price rigidity in oligopoly? Often prices appear to be relatively stable in oligopolistic markets. There are different models to explain periods of price stability. The most predominant one being the kinked demand curve model, though this has received substantial criticism and economists have …
Game study is the study of strategic interaction where one player’s decision depends on what the other player does. What the opponent does also depends upon what he thinks the first player will do. Dominant strategy – when one choice gives better result than other Nash equilibrium – where each player has nothing to gain …