Monday, 24 February 2020

Oligopoly

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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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