Oligopoly is a market structure in which only a few enterprises can prevent the others from exerting considerable influence. The concentration ratio is a measure of the largest companies' market share. One firm is a monopoly, two firms are a duopoly, and two or more firms are an oligopoly. The number of firms in an oligopoly has no definite upper limit, but it must be small enough that the activities of one firm have a considerable impact on the others. Steel corporations, oil companies, railways, tyre companies, grocery store chains, and cellular providers have all been oligopolies in the past. An oligopoly, according to economic and legal concerns, can stifle new entrants, limit innovation, and raise prices, all of which affect consumers. Instead of collecting prices from the market, firms in an oligopoly determine pricing, whether collectively (in a cartel) or under the leadership of a single enterprise. As a result, profit margins are higher than in a more competitive market. Explain how a dishonest oligopolist would determine its profit-maximizing pricing and output levels if it tried to undercut other oligopolistic enterprises' prices.

Oligopoly is a market structure in which only a few enterprises can prevent the others from exerting considerable influence. The concentration ratio is a measure of the largest companies' market share. One firm is a monopoly, two firms are a duopoly, and two or more firms are an oligopoly. The number of firms in an oligopoly has no definite upper limit, but it must be small enough that the activities of one firm have a considerable impact on the others. Steel corporations, oil companies, railways, tyre companies, grocery store chains, and cellular providers have all been oligopolies in the past. An oligopoly, according to economic and legal concerns, can stifle new entrants, limit innovation, and raise prices, all of which affect consumers. Instead of collecting prices from the market, firms in an oligopoly determine pricing, whether collectively (in a cartel) or under the leadership of a single enterprise. As a result, profit margins are higher than in a more competitive market. Explain how a dishonest oligopolist would determine its profit-maximizing pricing and output levels if it tried to undercut other oligopolistic enterprises' prices.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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