Friday, 8 November 2019

Unit 12: Oligopoly

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                                                           Unit 12: Oligopoly    


Oligopoly is a situation in which only a few firms (sellers) are competing in the market for a particular commodity.

Under oligopoly, each firm controls an important proportion of the total supply.

The demand curve of an individual firm under oligopoly is not known and is indeterminate.

Oligopolistic firm may form cartel or enter into collusion.

There may be barrier to new entrants.

Theories of oligopoly are divided into three broad groups, namely, models of non-collusive oligopoly, models of collusive oligopoly, and managerial theories.

The collusive oligopoly models have cartel, and price leadership.

There are four important sources of barriers to entry, such as product differentiation, control of inputs by existing suppliers, legal restrictions and scale economies.

Cartel: A formal collusive organisation of the oligopoly firms in an industry.

Monopoly: A market situation with a single supplier of a particular good or service.

Oligopoly: A situation in which few firms are competing in the market for a particular commodity.





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